Correlation Between Meta Platforms and Storage Vault

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

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

Diversification Opportunities for Meta Platforms and Storage Vault

-0.53

Correlation Coefficient

Meta Platforms  Storage Vault

Excellent diversification

The 3 months correlation between Meta and Storage is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms CDR and Storage Vault Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storage Vault Canada and Meta Platforms 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 Platforms CDR are associated (or correlated) with Storage Vault. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storage Vault Canada has no effect on the direction of Meta Platforms i.e., Meta Platforms and Storage Vault go up and down completely randomly.

Pair Corralation between Meta Platforms and Storage Vault

Assuming the 90 days trading horizon Meta Platforms CDR is expected to under-perform the Storage Vault. In addition to that, Meta Platforms is 1.16 times more volatile than Storage Vault Canada. It trades about -0.01 of its total potential returns per unit of risk. Storage Vault Canada is currently generating about 0.02 per unit of volatility. If you would invest  389.00  in Storage Vault Canada on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Storage Vault Canada or generate 1.03% return on investment over 90 days.

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

Meta Platforms CDR  vs.  Storage Vault Canada

Meta Platforms CDR

Risk-Adjusted Performance

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Storage Vault Canada

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Storage Vault Canada are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Storage Vault is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Meta Platforms and Storage Vault

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

The idea behind Meta Platforms CDR and Storage Vault Canada 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.