Correlation Between Boat Rocker and Meta Platforms

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

By analyzing existing cross correlation between Boat Rocker Media and Meta Platforms CDR, you can compare the effects of market volatilities on Boat Rocker 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 Boat Rocker with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boat Rocker and Meta Platforms.

Diversification Opportunities for Boat Rocker and Meta Platforms

-0.33

Correlation Coefficient

Boat Rocker  Meta Platforms

Very good diversification

The 3 months correlation between Boat and Meta is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Boat Rocker Media and Meta Platforms CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms CDR and Boat Rocker 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 Boat Rocker Media 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 CDR has no effect on the direction of Boat Rocker i.e., Boat Rocker and Meta Platforms go up and down completely randomly.

Pair Corralation between Boat Rocker and Meta Platforms

Assuming the 90 days trading horizon Boat Rocker Media is expected to under-perform the Meta Platforms. In addition to that, Boat Rocker is 1.7 times more volatile than Meta Platforms CDR. It trades about -0.05 of its total potential returns per unit of risk. Meta Platforms CDR is currently generating about 0.13 per unit of volatility. If you would invest  779.00  in Meta Platforms CDR on October 4, 2024 and sell it today you would earn a total of  2,469  from holding Meta Platforms CDR or generate 316.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Boat Rocker Media  vs.  Meta Platforms CDR

Boat Rocker Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boat Rocker Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Meta Platforms CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meta Platforms CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Meta Platforms is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Boat Rocker and Meta Platforms

The main advantage of trading using opposite Boat Rocker and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boat Rocker 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.

The idea behind Boat Rocker Media and Meta Platforms CDR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.