Correlation Between Playtech Plc and Meta Financial

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

By analyzing existing cross correlation between Playtech plc and Meta Financial Group, you can compare the effects of market volatilities on Playtech Plc 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 Playtech Plc with a short position of Meta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Meta Financial.

Diversification Opportunities for Playtech Plc and Meta Financial

-0.16

Correlation Coefficient

Playtech Plc  Meta Financial

Good diversification

The 3 months correlation between Playtech and Meta is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc 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 Playtech Plc 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 Playtech plc 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 Playtech Plc i.e., Playtech Plc and Meta Financial go up and down completely randomly.

Pair Corralation between Playtech Plc and Meta Financial

Assuming the 90 days trading horizon Playtech plc is expected to generate 0.49 times more return on investment than Meta Financial. However, Playtech plc is 2.03 times less risky than Meta Financial. It trades about -0.21 of its potential returns per unit of risk. Meta Financial Group is currently generating about -0.39 per unit of risk. If you would invest  874.00  in Playtech plc on October 10, 2024 and sell it today you would lose (27.00) from holding Playtech plc or give up 3.09% of portfolio value over 90 days.

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

Playtech plc  vs.  Meta Financial Group

Playtech plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Playtech plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Playtech Plc is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Meta Financial Group

Risk-Adjusted Performance

6 of 100

OK

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 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Playtech Plc and Meta Financial

The main advantage of trading using opposite Playtech Plc and Meta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc 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.

The idea behind Playtech plc and Meta Financial Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.