Correlation Between Meta Platforms and KKRS

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

By analyzing existing cross correlation between Meta Platforms and KKRS, you can compare the effects of market volatilities on Meta Platforms and KKRS 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 KKRS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and KKRS.

Diversification Opportunities for Meta Platforms and KKRS

-0.33

Correlation Coefficient

Meta Platforms  KKRS

Very good diversification

The 3 months correlation between Meta and KKRS is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and KKRS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKRS 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 are associated (or correlated) with KKRS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKRS has no effect on the direction of Meta Platforms i.e., Meta Platforms and KKRS go up and down completely randomly.

Pair Corralation between Meta Platforms and KKRS

Given the investment horizon of 90 days Meta Platforms is expected to generate 2.03 times more return on investment than KKRS. However, Meta Platforms is 2.03 times more volatile than KKRS. It trades about 0.15 of its potential returns per unit of risk. KKRS is currently generating about 0.05 per unit of risk. If you would invest  11,988  in Meta Platforms on September 20, 2024 and sell it today you would earn a total of  49,956  from holding Meta Platforms or generate 416.72% return on investment over 90 days.

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

Meta Platforms  vs.  KKRS

Meta Platforms

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Meta Platforms may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KKRS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KKRS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Meta Platforms and KKRS

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

The idea behind Meta Platforms and KKRS 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.