Correlation Between Meta Platforms and IQIYI
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and IQIYI 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 IQIYI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and IQIYI Inc, you can compare the effects of market volatilities on Meta Platforms and IQIYI 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 IQIYI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and IQIYI.
Diversification Opportunities for Meta Platforms and IQIYI
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meta and IQIYI is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and IQIYI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQIYI Inc 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 IQIYI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQIYI Inc has no effect on the direction of Meta Platforms i.e., Meta Platforms and IQIYI go up and down completely randomly.
Pair Corralation between Meta Platforms and IQIYI
Allowing for the 90-day total investment horizon Meta Platforms is expected to under-perform the IQIYI. But the stock apears to be less risky and, when comparing its historical volatility, Meta Platforms is 1.27 times less risky than IQIYI. The stock trades about -0.1 of its potential returns per unit of risk. The IQIYI Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 502.00 in IQIYI Inc on December 19, 2023 and sell it today you would lose (104.00) from holding IQIYI Inc or give up 20.72% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 12.7% |
Values | Daily Returns |
Meta Platforms vs. IQIYI Inc
Performance |
Timeline |
Meta Platforms |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
IQIYI Inc |
Meta Platforms and IQIYI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Meta Platforms and IQIYI
The main advantage of trading using opposite Meta Platforms and IQIYI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, IQIYI 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 IQIYI will offset losses from the drop in IQIYI's long position.Meta Platforms vs. Xtant Medical Holdings | Meta Platforms vs. LanzaTech Global | Meta Platforms vs. Artisan Partners Asset | Meta Platforms vs. Bank Of New |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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