Correlation Between Genius Sports and Meta Platforms

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Can any of the company-specific risk be diversified away by investing in both Genius Sports 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 Genius Sports and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genius Sports and Meta Platforms, you can compare the effects of market volatilities on Genius Sports 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 Genius Sports with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genius Sports and Meta Platforms.

Diversification Opportunities for Genius Sports and Meta Platforms

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Genius and Meta Platforms is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Genius Sports and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Genius Sports 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 Genius Sports 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 Genius Sports i.e., Genius Sports and Meta Platforms go up and down completely randomly.

Pair Corralation between Genius Sports and Meta Platforms

Given the investment horizon of 90 days Genius Sports is expected to under-perform the Meta Platforms. In addition to that, Genius Sports is 1.18 times more volatile than Meta Platforms. It trades about -0.15 of its total potential returns per unit of risk. Meta Platforms is currently generating about 0.07 per unit of volatility. If you would invest  18,411  in Meta Platforms on February 21, 2022 and sell it today you would earn a total of  943.00  from holding Meta Platforms or generate 5.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Genius Sports  vs.  Meta Platforms

 Performance (%) 
      Timeline 
Genius Sports 
Genius Performance
0 of 100
Over the last 90 days Genius Sports has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Genius Price Channel

Meta Platforms 
Meta Platforms Performance
0 of 100
Over the last 90 days Meta Platforms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Meta Platforms is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Meta Platforms Price Channel

Genius Sports and Meta Platforms Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Genius Sports and Meta Platforms

The main advantage of trading using opposite Genius Sports and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genius Sports 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 Genius Sports 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.
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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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