Correlation Between Meta Platforms and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Lowes Companies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Meta Platforms and Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Lowes Companies, you can compare the effects of market volatilities on Meta Platforms and Lowes Companies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Meta Platforms with a short position of Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Lowes Companies.
Diversification Opportunities for Meta Platforms and Lowes Companies
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Meta and Lowes is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies and Meta Platforms is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Meta Platforms are associated (or correlated) with Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Meta Platforms i.e., Meta Platforms and Lowes Companies go up and down completely randomly.
Pair Corralation between Meta Platforms and Lowes Companies
If you would invest 16,949 in Meta Platforms on January 25, 2024 and sell it today you would earn a total of 0.00 from holding Meta Platforms or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Meta Platforms vs. Lowes Companies
Performance |
| Timeline |
| Meta Platforms |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lowes Companies |
Meta Platforms and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Lowes Companies
The main advantage of trading using opposite Meta Platforms and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Lowes Companies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lowes Companies will offset losses from the drop in Lowes Companies' long position.| Meta Platforms vs. Meta Platforms | Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc |
| Lowes Companies vs. Arhaus Inc | Lowes Companies vs. Haverty Furniture Companies | Lowes Companies vs. Kirklands | Lowes Companies vs. Live Ventures |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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