Correlation Between Meta Platforms and WSP Global

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Can any of the company-specific risk be diversified away by investing in both Meta Platforms and WSP Global 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 WSP Global 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 WSP Global, you can compare the effects of market volatilities on Meta Platforms and WSP Global 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 WSP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and WSP Global.

Diversification Opportunities for Meta Platforms and WSP Global

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Meta and WSP is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms CDR and WSP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSP Global 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 WSP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSP Global has no effect on the direction of Meta Platforms i.e., Meta Platforms and WSP Global go up and down completely randomly.

Pair Corralation between Meta Platforms and WSP Global

Assuming the 90 days trading horizon Meta Platforms is expected to generate 1.48 times less return on investment than WSP Global. In addition to that, Meta Platforms is 1.83 times more volatile than WSP Global. It trades about 0.08 of its total potential returns per unit of risk. WSP Global is currently generating about 0.21 per unit of volatility. If you would invest  27,291  in WSP Global on April 15, 2025 and sell it today you would earn a total of  870.00  from holding WSP Global or generate 3.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Meta Platforms CDR  vs.  WSP Global

 Performance 
       Timeline  
Meta Platforms CDR 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms CDR are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Meta Platforms exhibited solid returns over the last few months and may actually be approaching a breakup point.
WSP Global 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in WSP Global are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, WSP Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Meta Platforms and WSP Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Meta Platforms and WSP Global

The main advantage of trading using opposite Meta Platforms and WSP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, WSP Global 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 WSP Global will offset losses from the drop in WSP Global's long position.
The idea behind Meta Platforms CDR and WSP Global 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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