Correlation Between Xtrackers and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both Xtrackers and Meta Platforms 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 Xtrackers and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers II and Meta Platforms, you can compare the effects of market volatilities on Xtrackers and Meta Platforms 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 Xtrackers with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and Meta Platforms.
Diversification Opportunities for Xtrackers and Meta Platforms
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and Meta is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers II and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Xtrackers 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 Xtrackers II are associated (or correlated) with Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of Xtrackers i.e., Xtrackers and Meta Platforms go up and down completely randomly.
Pair Corralation between Xtrackers and Meta Platforms
Assuming the 90 days trading horizon Xtrackers II is expected to under-perform the Meta Platforms. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers II is 7.66 times less risky than Meta Platforms. The etf trades about -0.31 of its potential returns per unit of risk. The Meta Platforms is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 45,755 in Meta Platforms on January 18, 2024 and sell it today you would earn a total of 1,545 from holding Meta Platforms or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers II vs. Meta Platforms
Performance |
| Timeline |
| Xtrackers II |
| Meta Platforms |
Xtrackers and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers and Meta Platforms
The main advantage of trading using opposite Xtrackers and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' long position.| Xtrackers vs. Xtrackers FTSE | Xtrackers vs. Xtrackers SP 500 | Xtrackers vs. Xtrackers MSCI | Xtrackers vs. Xtrackers Stoxx |
| Meta Platforms vs. Amazon Inc | Meta Platforms vs. Apple Inc | Meta Platforms vs. Meta Platforms | Meta Platforms vs. Microsoft |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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