Correlation Between Meta Platforms and Sparinvest Value

Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Sparinvest Value 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 Sparinvest Value into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Meta Platforms and Sparinvest Value Europa, you can compare the effects of market volatilities on Meta Platforms and Sparinvest Value 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 Sparinvest Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Sparinvest Value.

Diversification Opportunities for Meta Platforms and Sparinvest Value

0.0

Correlation Coefficient

Meta Platforms  Sparinvest Value

Pay attention - limited upside

The 3 months correlation between Meta and Sparinvest is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Sparinvest Value Europa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparinvest Value Europa 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 Sparinvest Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparinvest Value Europa has no effect on the direction of Meta Platforms i.e., Meta Platforms and Sparinvest Value go up and down completely randomly.

Pair Corralation between Meta Platforms and Sparinvest Value

Allowing for the 90-day total investment horizon Meta Platforms is expected to under-perform the Sparinvest Value. In addition to that, Meta Platforms is 3.86 times more volatile than Sparinvest Value Europa. It trades about -0.16 of its total potential returns per unit of risk. Sparinvest Value Europa is currently generating about 0.01 per unit of volatility. If you would invest  10,970  in Sparinvest Value Europa on January 20, 2024 and sell it today you would earn a total of  395.00  from holding Sparinvest Value Europa or generate 3.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.4%
Values	Daily Returns

Meta Platforms  vs.  Sparinvest Value Europa

Meta Platforms

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meta Platforms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Meta Platforms is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sparinvest Value Europa

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparinvest Value Europa are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent technical and fundamental indicators, Sparinvest Value is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Meta Platforms and Sparinvest Value

The main advantage of trading using opposite Meta Platforms and Sparinvest Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Sparinvest Value 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 Sparinvest Value will offset losses from the drop in Sparinvest Value's long position.

The idea behind Meta Platforms and Sparinvest Value Europa pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.