Correlation Between Meta Platforms and EcoPlus

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

By analyzing existing cross correlation between Meta Platforms and EcoPlus, you can compare the effects of market volatilities on Meta Platforms and EcoPlus 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 EcoPlus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and EcoPlus.

Diversification Opportunities for Meta Platforms and EcoPlus

-0.66

Correlation Coefficient

Meta Platforms  EcoPlus

Excellent diversification

The 3 months correlation between Meta and EcoPlus is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and EcoPlus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EcoPlus 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 EcoPlus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EcoPlus has no effect on the direction of Meta Platforms i.e., Meta Platforms and EcoPlus go up and down completely randomly.

Pair Corralation between Meta Platforms and EcoPlus

Given the investment horizon of 90 days Meta Platforms is expected to generate 5.04 times less return on investment than EcoPlus. But when comparing it to its historical volatility, Meta Platforms is 11.86 times less risky than EcoPlus. It trades about 0.19 of its potential returns per unit of risk. EcoPlus is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.39  in EcoPlus on May 1, 2025 and sell it today you would earn a total of  0.00  from holding EcoPlus or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Meta Platforms  vs.  EcoPlus

Meta Platforms

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Meta Platforms sustained solid returns over the last few months and may actually be approaching a breakup point.

EcoPlus

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EcoPlus are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, EcoPlus disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Meta Platforms and EcoPlus

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

The idea behind Meta Platforms and EcoPlus 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.