Correlation Between Meta Platforms and Apple

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

Diversification Opportunities for Meta Platforms and Apple

0.28

Correlation Coefficient

Meta Platforms  Apple

Modest diversification

The 3 months correlation between Meta and Apple is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms CDR and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of Meta Platforms i.e., Meta Platforms and Apple go up and down completely randomly.

Pair Corralation between Meta Platforms and Apple

Assuming the 90 days trading horizon Meta Platforms CDR is expected to generate 1.2 times more return on investment than Apple. However, Meta Platforms is 1.2 times more volatile than Apple Inc CDR. It trades about -0.01 of its potential returns per unit of risk. Apple Inc CDR is currently generating about -0.13 per unit of risk. If you would invest  3,280  in Meta Platforms CDR on December 30, 2024 and sell it today you would lose (101.00) from holding Meta Platforms CDR or give up 3.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Meta Platforms CDR  vs.  Apple Inc CDR

Meta Platforms CDR

Risk-Adjusted Performance

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 technical and fundamental indicators, Meta Platforms is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Apple Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Meta Platforms and Apple

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

The idea behind Meta Platforms CDR and Apple Inc CDR 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.