Correlation Between Meta Platforms and Acceleware

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

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

Diversification Opportunities for Meta Platforms and Acceleware

-0.26

Correlation Coefficient

Meta Platforms  Acceleware

Very good diversification

The 3 months correlation between Meta and Acceleware is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms CDR and Acceleware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acceleware 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 CDR are associated (or correlated) with Acceleware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acceleware has no effect on the direction of Meta Platforms i.e., Meta Platforms and Acceleware go up and down completely randomly.

Pair Corralation between Meta Platforms and Acceleware

Assuming the 90 days trading horizon Meta Platforms CDR is expected to under-perform the Acceleware. But the stock apears to be less risky and, when comparing its historical volatility, Meta Platforms CDR is 2.05 times less risky than Acceleware. The stock trades about -0.04 of its potential returns per unit of risk. The Acceleware is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Acceleware on March 2, 2024 and sell it today you would earn a total of  0.00  from holding Acceleware or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

Meta Platforms CDR  vs.  Acceleware

Meta Platforms CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meta Platforms CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Meta Platforms is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Acceleware

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acceleware are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Acceleware may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Meta Platforms and Acceleware

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

The idea behind Meta Platforms CDR and Acceleware 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.