Correlation Between Weibo Corp and Sirius XM
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Sirius XM 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 Weibo Corp and Sirius XM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Sirius XM Holding, you can compare the effects of market volatilities on Weibo Corp 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 Weibo Corp with a short position of Sirius XM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Sirius XM.
Diversification Opportunities for Weibo Corp and Sirius XM
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weibo and Sirius is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Sirius XM Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirius XM Holding and Weibo Corp 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 Weibo Corp 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 Holding has no effect on the direction of Weibo Corp i.e., Weibo Corp and Sirius XM go up and down completely randomly.
Pair Corralation between Weibo Corp and Sirius XM
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 2.03 times more return on investment than Sirius XM. However, Weibo Corp is 2.03 times more volatile than Sirius XM Holding. It trades about -0.07 of its potential returns per unit of risk. Sirius XM Holding is currently generating about -0.64 per unit of risk. If you would invest 857.00 in Weibo Corp on January 20, 2024 and sell it today you would lose (51.00) from holding Weibo Corp or give up 5.95% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Weibo Corp vs. Sirius XM Holding
Performance |
Timeline |
Weibo Corp |
Sirius XM Holding |
Weibo Corp and Sirius XM Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Weibo Corp and Sirius XM
The main advantage of trading using opposite Weibo Corp and Sirius XM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Sirius XM 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 Sirius XM will offset losses from the drop in Sirius XM's long position.The idea behind Weibo Corp and Sirius XM Holding 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.Sirius XM vs. Liberty Global PLC | Sirius XM vs. Shenandoah Telecommunications Co | Sirius XM vs. Liberty Global PLC | Sirius XM vs. Liberty Latin America |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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