Correlation Between Meta Platforms and Uber Technologies
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Uber Technologies 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 Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Uber Technologies, you can compare the effects of market volatilities on Meta Platforms and Uber Technologies 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 Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Uber Technologies.
Diversification Opportunities for Meta Platforms and Uber Technologies
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meta and Uber is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Meta Platforms i.e., Meta Platforms and Uber Technologies go up and down completely randomly.
Pair Corralation between Meta Platforms and Uber Technologies
Given the investment horizon of 90 days Meta Platforms is expected to generate 0.72 times more return on investment than Uber Technologies. However, Meta Platforms is 1.39 times less risky than Uber Technologies. It trades about 0.08 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.04 per unit of risk. If you would invest 47,899 in Meta Platforms on August 23, 2024 and sell it today you would earn a total of 8,082 from holding Meta Platforms or generate 16.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Platforms vs. Uber Technologies
Performance |
| Timeline |
| Meta Platforms |
| Uber Technologies |
Meta Platforms and Uber Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Uber Technologies
The main advantage of trading using opposite Meta Platforms and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.| Meta Platforms vs. Zillow Group Class | Meta Platforms vs. Outbrain | Meta Platforms vs. TuanChe ADR | Meta Platforms vs. Weibo Corp |
| Uber Technologies vs. Zoom Video Communications | Uber Technologies vs. Snowflake | Uber Technologies vs. Workday | Uber Technologies vs. C3 Ai Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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