Correlation Between Uber Technologies and Meta Platforms

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Can any of the company-specific risk be diversified away by investing in both Uber Technologies 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 Uber Technologies and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and Meta Platforms, you can compare the effects of market volatilities on Uber Technologies 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 Uber Technologies with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Meta Platforms.

Diversification Opportunities for Uber Technologies and Meta Platforms

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Uber and Meta is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Meta Platforms go up and down completely randomly.

Pair Corralation between Uber Technologies and Meta Platforms

Given the investment horizon of 90 days Uber Technologies is expected to generate 1.41 times more return on investment than Meta Platforms. However, Uber Technologies is 1.41 times more volatile than Meta Platforms. It trades about 0.27 of its potential returns per unit of risk. Meta Platforms is currently generating about 0.26 per unit of risk. If you would invest  6,532  in Uber Technologies on March 15, 2024 and sell it today you would earn a total of  783.00  from holding Uber Technologies or generate 11.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Uber Technologies  vs.  Meta Platforms

 Performance 
       Timeline  
Uber Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Uber Technologies is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.
Meta Platforms 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Meta Platforms may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Uber Technologies and Meta Platforms Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Uber Technologies and Meta Platforms

The main advantage of trading using opposite Uber Technologies and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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 Uber Technologies 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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