Correlation Between Yancoal Australia and Meta Financial

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

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

Diversification Opportunities for Yancoal Australia and Meta Financial

0.48

Correlation Coefficient

Yancoal Australia  Meta Financial

Very weak diversification

The 3 months correlation between Yancoal and Meta is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Yancoal Australia 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 Yancoal Australia 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 Yancoal Australia 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 Yancoal Australia i.e., Yancoal Australia and Meta Financial go up and down completely randomly.

Pair Corralation between Yancoal Australia and Meta Financial

Assuming the 90 days trading horizon Yancoal Australia is expected to under-perform the Meta Financial. In addition to that, Yancoal Australia is 1.87 times more volatile than Meta Financial Group. It trades about -0.05 of its total potential returns per unit of risk. Meta Financial Group is currently generating about -0.06 per unit of volatility. If you would invest  7,095  in Meta Financial Group on December 22, 2024 and sell it today you would lose (495.00) from holding Meta Financial Group or give up 6.98% of portfolio value over 90 days.

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

Yancoal Australia  vs.  Meta Financial Group

Yancoal Australia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yancoal Australia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Meta Financial Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Meta Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Yancoal Australia and Meta Financial

The main advantage of trading using opposite Yancoal Australia and Meta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yancoal Australia 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 Yancoal Australia 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.