Correlation Between Meta Financial and Charter Communications
Can any of the company-specific risk be diversified away by investing in both Meta Financial and Charter Communications 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 Charter Communications 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 Charter Communications, you can compare the effects of market volatilities on Meta Financial and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Financial and Charter Communications.
Diversification Opportunities for Meta Financial and Charter Communications
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Meta and Charter is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Meta Financial Group and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Meta Financial i.e., Meta Financial and Charter Communications go up and down completely randomly.
Pair Corralation between Meta Financial and Charter Communications
Assuming the 90 days horizon Meta Financial Group is expected to generate 1.11 times more return on investment than Charter Communications. However, Meta Financial is 1.11 times more volatile than Charter Communications. It trades about 0.06 of its potential returns per unit of risk. Charter Communications is currently generating about -0.09 per unit of risk. If you would invest 6,746 in Meta Financial Group on October 7, 2024 and sell it today you would earn a total of 304.00 from holding Meta Financial Group or generate 4.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Meta Financial Group vs. Charter Communications
Performance |
Timeline |
Meta Financial Group |
Charter Communications |
Meta Financial and Charter Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Meta Financial and Charter Communications
The main advantage of trading using opposite Meta Financial and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Financial position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.Meta Financial vs. Postal Savings Bank | Meta Financial vs. Truist Financial | Meta Financial vs. Oversea Chinese Banking | Meta Financial vs. Superior Plus Corp |
Charter Communications vs. SOEDER SPORTFISKE AB | Charter Communications vs. ALGOMA STEEL GROUP | Charter Communications vs. Fukuyama Transporting Co | Charter Communications vs. AIR PRODCHEMICALS |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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