Correlation Between Meta Financial and Arthur J

Can any of the company-specific risk be diversified away by investing in both Meta Financial and Arthur J 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 Arthur J 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 Arthur J Gallagher, you can compare the effects of market volatilities on Meta Financial and Arthur J 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 Arthur J. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Financial and Arthur J.

Diversification Opportunities for Meta Financial and Arthur J

0.8

Correlation Coefficient

Meta Financial  Arthur J

Very poor diversification

The 3 months correlation between Meta and Arthur is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Meta Financial Group and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher 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 Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of Meta Financial i.e., Meta Financial and Arthur J go up and down completely randomly.

Pair Corralation between Meta Financial and Arthur J

Assuming the 90 days horizon Meta Financial Group is expected to generate 0.93 times more return on investment than Arthur J. However, Meta Financial Group is 1.08 times less risky than Arthur J. It trades about 0.24 of its potential returns per unit of risk. Arthur J Gallagher is currently generating about 0.2 per unit of risk. If you would invest  7,100  in Meta Financial Group on October 23, 2024 and sell it today you would earn a total of  400.00  from holding Meta Financial Group or generate 5.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.12%
Values	Daily Returns

Meta Financial Group  vs.  Arthur J Gallagher

Meta Financial Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Financial Group are ranked lower than 6 (%) 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.

Arthur J Gallagher

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arthur J Gallagher are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Arthur J may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Meta Financial and Arthur J

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

The idea behind Meta Financial Group and Arthur J Gallagher 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.