Correlation Between Meta CDR and Labrador Iron

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

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

Diversification Opportunities for Meta CDR and Labrador Iron

-0.54

Correlation Coefficient

Meta CDR  Labrador Iron

Excellent diversification

The 3 months correlation between Meta and Labrador is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Meta CDR and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore and Meta CDR 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 CDR are associated (or correlated) with Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of Meta CDR i.e., Meta CDR and Labrador Iron go up and down completely randomly.

Pair Corralation between Meta CDR and Labrador Iron

Assuming the 90 days trading horizon Meta CDR is expected to generate 2.06 times more return on investment than Labrador Iron. However, Meta CDR is 2.06 times more volatile than Labrador Iron Ore. It trades about 0.13 of its potential returns per unit of risk. Labrador Iron Ore is currently generating about -0.07 per unit of risk. If you would invest  3,616  in Meta CDR on May 14, 2025 and sell it today you would earn a total of  568.00  from holding Meta CDR or generate 15.71% return on investment over 90 days.

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

Meta CDR  vs.  Labrador Iron Ore

Meta CDR

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Meta CDR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Meta CDR displayed solid returns over the last few months and may actually be approaching a breakup point.

Labrador Iron Ore

Risk-Adjusted Performance

Weakest

Over the last 90 days Labrador Iron Ore has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Labrador Iron is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Meta CDR and Labrador Iron

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

The idea behind Meta CDR and Labrador Iron Ore 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.