Correlation Between Meta Platforms and Advanced Micro
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Advanced Micro 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 Advanced Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Advanced Micro Devices, you can compare the effects of market volatilities on Meta Platforms and Advanced Micro 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 Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Advanced Micro.
Diversification Opportunities for Meta Platforms and Advanced Micro
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Meta and Advanced is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Meta Platforms i.e., Meta Platforms and Advanced Micro go up and down completely randomly.
Pair Corralation between Meta Platforms and Advanced Micro
Allowing for the 90-day total investment horizon Meta Platforms is expected to under-perform the Advanced Micro. In addition to that, Meta Platforms is 1.3 times more volatile than Advanced Micro Devices. It trades about -0.08 of its total potential returns per unit of risk. Advanced Micro Devices is currently generating about 0.05 per unit of volatility. If you would invest 9,737 in Advanced Micro Devices on December 30, 2023 and sell it today you would earn a total of 8,312 from holding Advanced Micro Devices or generate 85.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 10.93% |
Values | Daily Returns |
Meta Platforms vs. Advanced Micro Devices
Performance |
Timeline |
Meta Platforms |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Advanced Micro Devices |
Meta Platforms and Advanced Micro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Meta Platforms and Advanced Micro
The main advantage of trading using opposite Meta Platforms and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro's long position.Meta Platforms vs. Amgen Inc | Meta Platforms vs. Apogee Enterprises | Meta Platforms vs. Simpson Manufacturing | Meta Platforms vs. Western Digital |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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