Correlation Between Meta Financial and ALIOR BANK

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

By analyzing existing cross correlation between Meta Financial Group and ALIOR BANK, you can compare the effects of market volatilities on Meta Financial and ALIOR BANK 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 Financial with a short position of ALIOR BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Financial and ALIOR BANK.

Diversification Opportunities for Meta Financial and ALIOR BANK

-0.15

Correlation Coefficient

Meta Financial  ALIOR BANK

Good diversification

The 3 months correlation between Meta and ALIOR is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Meta Financial Group and ALIOR BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALIOR BANK and Meta Financial 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 Financial Group are associated (or correlated) with ALIOR BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALIOR BANK has no effect on the direction of Meta Financial i.e., Meta Financial and ALIOR BANK go up and down completely randomly.

Pair Corralation between Meta Financial and ALIOR BANK

Assuming the 90 days horizon Meta Financial is expected to generate 1.93 times less return on investment than ALIOR BANK. But when comparing it to its historical volatility, Meta Financial Group is 1.25 times less risky than ALIOR BANK. It trades about 0.06 of its potential returns per unit of risk. ALIOR BANK is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  719.00  in ALIOR BANK on October 4, 2024 and sell it today you would earn a total of  1,281  from holding ALIOR BANK or generate 178.16% return on investment over 90 days.

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

Meta Financial Group  vs.  ALIOR BANK

Meta Financial Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Financial Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Meta Financial reported solid returns over the last few months and may actually be approaching a breakup point.

ALIOR BANK

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Meta Financial and ALIOR BANK

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

The idea behind Meta Financial Group and ALIOR BANK 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.