Correlation Between Meta Platforms and G2D Investments

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Can any of the company-specific risk be diversified away by investing in both Meta Platforms and G2D Investments 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 G2D Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and G2D Investments, you can compare the effects of market volatilities on Meta Platforms and G2D Investments 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 G2D Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and G2D Investments.

Diversification Opportunities for Meta Platforms and G2D Investments

0.19
  Correlation Coefficient

Average diversification

The 3 months correlation between Meta and G2D is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and G2D Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G2D Investments 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 G2D Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G2D Investments has no effect on the direction of Meta Platforms i.e., Meta Platforms and G2D Investments go up and down completely randomly.

Pair Corralation between Meta Platforms and G2D Investments

Assuming the 90 days trading horizon Meta Platforms is expected to generate 0.77 times more return on investment than G2D Investments. However, Meta Platforms is 1.3 times less risky than G2D Investments. It trades about 0.24 of its potential returns per unit of risk. G2D Investments is currently generating about 0.09 per unit of risk. If you would invest  10,776  in Meta Platforms on April 24, 2025 and sell it today you would earn a total of  3,244  from holding Meta Platforms or generate 30.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Meta Platforms  vs.  G2D Investments

 Performance 
       Timeline  
Meta Platforms 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Meta Platforms sustained solid returns over the last few months and may actually be approaching a breakup point.
G2D Investments 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in G2D Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, G2D Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Meta Platforms and G2D Investments Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Meta Platforms and G2D Investments

The main advantage of trading using opposite Meta Platforms and G2D Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, G2D Investments 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 G2D Investments will offset losses from the drop in G2D Investments' long position.
The idea behind Meta Platforms and G2D Investments 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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