Correlation Between Twitter and Sirius XM

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

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Can any of the company-specific risk be diversified away by investing in both Twitter and Sirius XM at the same time? Although using correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combing Twitter and Sirius XM into the same portfolio which is an essential part of fundamental portfolio management process.

Diversification Opportunities for Twitter and Sirius XM

0.87
Correlation
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((XM))

Very poor diversification

The 3 months correlation between Twitter and Sirius is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Twitter Inc and Sirius XM Holdings Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Sirius XM Holdings and Twitter 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 Twitter are associated (or correlated) with Sirius XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirius XM Holdings has no effect on the direction of Twitter i.e. Twitter and Sirius XM go up and down completely randomly.

Pair Corralation between Twitter and Sirius XM

Given the investment horizon of 30 days, Twitter is expected to generate 1.16 times more return on investment than Sirius XM. However, Twitter is 1.16 times more volatile than Sirius XM Holdings. It trades about 0.02 of its potential returns per unit of risk. Sirius XM Holdings is currently generating about -0.01 per unit of risk. If you would invest  3,320  in Twitter on April 28, 2020 and sell it today you would lose (111.00)  from holding Twitter or give up 3.34% of portfolio value over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Twitter Inc  vs.  Sirius XM Holdings Inc

 Performance (%) 
      Timeline 
Twitter 
11

Twitter Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Twitter are ranked lower than 1 (%) of all global equities and portfolios over the last 30 days. In defiance of relatively invariable forward-looking signals, Twitter is not utilizing all of its potentials. The current stock price agitation, may contribute to short term losses for the management.
Sirius XM Holdings 
00

Sirius XM Risk-Adjusted Performance

Over the last 30 days Sirius XM Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Sirius XM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholder.

Twitter and Sirius XM Volatility Contrast

 Predicted Return Density 
      Returns 
Check out your portfolio center. Please also try Price Ceiling Movement module to calculate and plot price ceiling movement for different equity instruments.


 
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