Correlation Between Fiverr International and Meta Platforms

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

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

Diversification Opportunities for Fiverr International and Meta Platforms

-0.65

Correlation Coefficient

Fiverr International  Meta Platforms

Excellent diversification

The 24 months correlation between Fiverr and Meta is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fiverr International and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Fiverr International 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 Fiverr International are associated (or correlated) with Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of Fiverr International i.e., Fiverr International and Meta Platforms go up and down completely randomly.

Pair Corralation between Fiverr International and Meta Platforms

Given the investment horizon of 90 days Fiverr International is expected to generate 1.03 times more return on investment than Meta Platforms. However, Fiverr International is 1.03 times more volatile than Meta Platforms. It trades about -0.05 of its potential returns per unit of risk. Meta Platforms is currently generating about -0.07 per unit of risk. If you would invest  2,266  in Fiverr International on February 7, 2024 and sell it today you would lose (146.00) from holding Fiverr International or give up 6.44% of portfolio value over 90 days.

Time Period	24 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Fiverr International  vs.  Meta Platforms

Fiverr International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fiverr International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fiverr International is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Meta Platforms

Risk-Adjusted Performance

5 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Meta Platforms sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fiverr International and Meta Platforms

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

The idea behind Fiverr International and Meta Platforms 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.