Correlation Between Hyundai and Meta Financial
Can any of the company-specific risk be diversified away by investing in both Hyundai and Meta Financial 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 Hyundai and Meta Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Meta Financial Group, you can compare the effects of market volatilities on Hyundai and Meta Financial 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 Hyundai with a short position of Meta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Meta Financial.
Diversification Opportunities for Hyundai and Meta Financial
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hyundai and Meta is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Meta Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Financial Group and Hyundai 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 Hyundai Motor are associated (or correlated) with Meta Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Financial Group has no effect on the direction of Hyundai i.e., Hyundai and Meta Financial go up and down completely randomly.
Pair Corralation between Hyundai and Meta Financial
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Meta Financial. But the stock apears to be less risky and, when comparing its historical volatility, Hyundai Motor is 1.41 times less risky than Meta Financial. The stock trades about -0.08 of its potential returns per unit of risk. The Meta Financial Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,496 in Meta Financial Group on October 6, 2024 and sell it today you would earn a total of 554.00 from holding Meta Financial Group or generate 8.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hyundai Motor vs. Meta Financial Group
Performance |
Timeline |
Hyundai Motor |
Meta Financial Group |
Hyundai and Meta Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hyundai and Meta Financial
The main advantage of trading using opposite Hyundai and Meta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Meta Financial 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 Financial will offset losses from the drop in Meta Financial's long position.Hyundai vs. ADRIATIC METALS LS 013355 | Hyundai vs. Agilent Technologies | Hyundai vs. Minerals Technologies | Hyundai vs. Nippon Light Metal |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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