Correlation Between Valvoline and Meta Platforms

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Valvoline 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 Valvoline and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valvoline and Meta Platforms, you can compare the effects of market volatilities on Valvoline 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 Valvoline with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valvoline and Meta Platforms.

Diversification Opportunities for Valvoline and Meta Platforms

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Valvoline and Meta Platforms is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Valvoline and Meta Platforms in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Valvoline 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 Valvoline 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 Valvoline i.e., Valvoline and Meta Platforms go up and down completely randomly.

Pair Corralation between Valvoline and Meta Platforms

Considering the 90-day investment horizon Valvoline is expected to generate 0.5 times more return on investment than Meta Platforms. However, Valvoline is 1.98 times less risky than Meta Platforms. It trades about -0.09 of its potential returns per unit of risk. Meta Platforms is currently generating about -0.08 per unit of risk. If you would invest  3,176  in Valvoline on February 18, 2022 and sell it today you would lose (200.00)  from holding Valvoline or give up 6.3% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Valvoline  vs.  Meta Platforms

 Performance (%) 
      Timeline 
Valvoline 
Valvoline Performance
0 of 100
Over the last 90 days Valvoline has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Valvoline Price Channel

Meta Platforms 
Meta Platforms Performance
0 of 100
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 latest stock price disturbance, may contribute to short-term losses for the investors.

Meta Platforms Price Channel

Valvoline and Meta Platforms Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Valvoline and Meta Platforms

The main advantage of trading using opposite Valvoline and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valvoline 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 Valvoline 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.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

Other Complementary Tools

Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Shere Portfolio
Track or share privately all of your investments from the convenience of any device
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go