Correlation Between Pinterest and Meta Platforms

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

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

Diversification Opportunities for Pinterest and Meta Platforms

0.92

Correlation Coefficient

Pinterest  Meta Platforms

Almost no diversification

The 3 months correlation between Pinterest and Meta is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Pinterest 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 Pinterest 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 Pinterest i.e., Pinterest and Meta Platforms go up and down completely randomly.

Pair Corralation between Pinterest and Meta Platforms

Given the investment horizon of 90 days Pinterest is expected to under-perform the Meta Platforms. In addition to that, Pinterest is 1.34 times more volatile than Meta Platforms. It trades about -0.05 of its total potential returns per unit of risk. Meta Platforms is currently generating about -0.06 per unit of volatility. If you would invest  69,684  in Meta Platforms on February 3, 2025 and sell it today you would lose (9,982) from holding Meta Platforms or give up 14.32% of portfolio value over 90 days.

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

Pinterest  vs.  Meta Platforms

Pinterest

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Meta Platforms

Risk-Adjusted Performance

Very Weak

Over the last 90 days Meta Platforms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Pinterest and Meta Platforms

The main advantage of trading using opposite Pinterest and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinterest 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 Pinterest 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 the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.