Correlation Between Leucadia National and Meta Platforms

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Can any of the company-specific risk be diversified away by investing in both Leucadia National and Meta Platforms 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 Leucadia National and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leucadia National and Meta Platforms, you can compare the effects of market volatilities on Leucadia National and Meta Platforms 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 Leucadia National with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leucadia National and Meta Platforms.

Diversification Opportunities for Leucadia National and Meta Platforms

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Leucadia and Meta is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Leucadia National and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Leucadia National 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 Leucadia National are associated (or correlated) with Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of Leucadia National i.e., Leucadia National and Meta Platforms go up and down completely randomly.

Pair Corralation between Leucadia National and Meta Platforms

If you would invest (100.00) in Leucadia National on December 30, 2023 and sell it today you would earn a total of  100.00  from holding Leucadia National or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Leucadia National  vs.  Meta Platforms

 Performance 
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Leucadia National 

Risk-Adjusted Performance

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Over the last 90 days Leucadia National has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Leucadia National is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.
Meta Platforms 

Risk-Adjusted Performance

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Over the last 90 days Meta Platforms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Meta Platforms is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Leucadia National and Meta Platforms Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Leucadia National and Meta Platforms

The main advantage of trading using opposite Leucadia National and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leucadia National position performs unexpectedly, Meta Platforms 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 Platforms will offset losses from the drop in Meta Platforms' long position.
The idea behind Leucadia National and Meta Platforms 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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