Correlation Between Twitter and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both Twitter 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 Twitter and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Twitter and Meta Platforms, you can compare the effects of market volatilities on Twitter 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 Twitter with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Twitter and Meta Platforms.
Diversification Opportunities for Twitter and Meta Platforms
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Twitter and Meta is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Twitter and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Twitter 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 Twitter 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 Twitter i.e., Twitter and Meta Platforms go up and down completely randomly.
Pair Corralation between Twitter and Meta Platforms
Given the investment horizon of 90 days Twitter is expected to generate 0.79 times more return on investment than Meta Platforms. However, Twitter is 1.27 times less risky than Meta Platforms. It trades about 0.04 of its potential returns per unit of risk. Meta Platforms is currently generating about -0.08 per unit of risk. If you would invest 4,701 in Twitter on December 30, 2023 and sell it today you would earn a total of 669.00 from holding Twitter or generate 14.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 38.57% |
Values | Daily Returns |
Twitter vs. Meta Platforms
Performance |
Timeline |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Meta Platforms |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Twitter and Meta Platforms Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Twitter and Meta Platforms
The main advantage of trading using opposite Twitter and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twitter 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.Twitter vs. United Guardian | Twitter vs. Kinetik Holdings | Twitter vs. Philip Morris International | Twitter vs. ASML Holding NV |
Meta Platforms vs. Amgen Inc | Meta Platforms vs. Apogee Enterprises | Meta Platforms vs. Simpson Manufacturing | Meta Platforms vs. Western Digital |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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