Correlation Between Sirius XM and Weibo Corp

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

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

Diversification Opportunities for Sirius XM and Weibo Corp

0.54
  Correlation Coefficient
Sirius XM Holdings
Weibo Corp ADR

Very weak diversification

The 3 months correlation between Sirius and Weibo is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sirius XM Holdings and Weibo Corp ADR in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp ADR and Sirius XM 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 Sirius XM Holdings are associated (or correlated) with Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp ADR has no effect on the direction of Sirius XM i.e., Sirius XM and Weibo Corp go up and down completely randomly.

Pair Corralation between Sirius XM and Weibo Corp

Given the investment horizon of 90 days Sirius XM Holdings is expected to generate 0.35 times more return on investment than Weibo Corp. However, Sirius XM Holdings is 2.87 times less risky than Weibo Corp. It trades about -0.17 of its potential returns per unit of risk. Weibo Corp ADR is currently generating about -0.09 per unit of risk. If you would invest  647.00  in Sirius XM Holdings on June 30, 2021 and sell it today you would lose (47.00)  from holding Sirius XM Holdings or give up 7.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Sirius XM Holdings  vs.  Weibo Corp ADR

 Performance (%) 
      Timeline 
Sirius XM Holdings 
 Sirius Performance
0 of 100
Over the last 90 days Sirius XM Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Weibo Corp ADR 
 Weibo Performance
0 of 100
Over the last 90 days Weibo Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Weibo Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sirius XM and Weibo Corp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Sirius XM and Weibo Corp

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

Sirius XM Holdings

Pair trading matchups for Sirius XM

The idea behind Sirius XM Holdings and Weibo Corp ADR 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.

Weibo Corp ADR

Pair trading matchups for Weibo Corp

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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