Correlation Between Meta Platforms and Evofem Biosciences

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

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

Diversification Opportunities for Meta Platforms and Evofem Biosciences

0.0

Correlation Coefficient

Meta Platforms  Evofem Biosciences

Pay attention - limited upside

The 3 months correlation between Meta and Evofem is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Evofem Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evofem Biosciences 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 Evofem Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evofem Biosciences has no effect on the direction of Meta Platforms i.e., Meta Platforms and Evofem Biosciences go up and down completely randomly.

Pair Corralation between Meta Platforms and Evofem Biosciences

If you would invest  59,235  in Meta Platforms on December 1, 2024 and sell it today you would earn a total of  7,585  from holding Meta Platforms or generate 12.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Meta Platforms  vs.  Evofem Biosciences

Meta Platforms

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Meta Platforms sustained solid returns over the last few months and may actually be approaching a breakup point.

Evofem Biosciences

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Meta Platforms and Evofem Biosciences

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

The idea behind Meta Platforms and Evofem Biosciences 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.