Correlation Between Amazon and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Meta Platforms, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Meta Platforms.
Diversification Opportunities for Amazon and Meta Platforms
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and Meta is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and Meta Platforms go up and down completely randomly.
Pair Corralation between Amazon and Meta Platforms
Given the investment horizon of 90 days Amazon Inc is expected to generate 1.11 times more return on investment than Meta Platforms. However, Amazon is 1.11 times more volatile than Meta Platforms. It trades about -0.01 of its potential returns per unit of risk. Meta Platforms is currently generating about -0.15 per unit of risk. If you would invest 23,160 in Amazon Inc on August 28, 2025 and sell it today you would lose (532.00) from holding Amazon Inc or give up 2.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Meta Platforms
Performance |
| Timeline |
| Amazon Inc |
| Meta Platforms |
Amazon and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Meta Platforms
The main advantage of trading using opposite Amazon and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.| Amazon vs. Bebida Beverage Co | Amazon vs. The Tinley Beverage | Amazon vs. Verde Clean Fuels | Amazon vs. Tsingtao Brewery |
| Meta Platforms vs. Glorywin Entertainment Group | Meta Platforms vs. Seven West Media | Meta Platforms vs. National CineMedia | Meta Platforms vs. Kelvin Medical |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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