Correlation Between Twilio and Facebook

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

By analyzing existing cross correlation between Twilio Inc and Facebook, you can compare the effects of market volatilities on Twilio and Facebook 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 Twilio with a short position of Facebook. Check out your portfolio center. Please also check ongoing floating volatility patterns of Twilio and Facebook.

Diversification Opportunities for Twilio and Facebook

0.0

Correlation Coefficient

Twilio  Facebook

Pay attention - limited upside

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

Pair Corralation between Twilio and Facebook

If you would invest  7,057  in Twilio Inc on September 21, 2024 and sell it today you would earn a total of  3,489  from holding Twilio Inc or generate 49.44% return on investment over 90 days.

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

Twilio Inc  vs.  Facebook

Twilio Inc

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Twilio Inc are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Twilio displayed solid returns over the last few months and may actually be approaching a breakup point.

Facebook

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Facebook has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Facebook is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Twilio and Facebook

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

The idea behind Twilio Inc and Facebook 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.