Correlation Between Alibaba Group and WOODSIDE ENE
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and WOODSIDE ENE 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 Alibaba Group and WOODSIDE ENE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and WOODSIDE ENE SPADR, you can compare the effects of market volatilities on Alibaba Group and WOODSIDE ENE 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 Alibaba Group with a short position of WOODSIDE ENE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and WOODSIDE ENE.
Diversification Opportunities for Alibaba Group and WOODSIDE ENE
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alibaba and WOODSIDE is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and WOODSIDE ENE SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOODSIDE ENE SPADR and Alibaba Group 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 Alibaba Group Holding are associated (or correlated) with WOODSIDE ENE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOODSIDE ENE SPADR has no effect on the direction of Alibaba Group i.e., Alibaba Group and WOODSIDE ENE go up and down completely randomly.
Pair Corralation between Alibaba Group and WOODSIDE ENE
Assuming the 90 days horizon Alibaba Group Holding is expected to under-perform the WOODSIDE ENE. In addition to that, Alibaba Group is 1.03 times more volatile than WOODSIDE ENE SPADR. It trades about -0.11 of its total potential returns per unit of risk. WOODSIDE ENE SPADR is currently generating about 0.15 per unit of volatility. If you would invest 1,390 in WOODSIDE ENE SPADR on September 2, 2024 and sell it today you would earn a total of 120.00 from holding WOODSIDE ENE SPADR or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. WOODSIDE ENE SPADR
Performance |
| Timeline |
| Alibaba Group Holding |
| WOODSIDE ENE SPADR |
Alibaba Group and WOODSIDE ENE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and WOODSIDE ENE
The main advantage of trading using opposite Alibaba Group and WOODSIDE ENE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, WOODSIDE ENE 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 WOODSIDE ENE will offset losses from the drop in WOODSIDE ENE's long position.| Alibaba Group vs. Strategic Investments AS | Alibaba Group vs. SEI INVESTMENTS | Alibaba Group vs. WisdomTree Investments | Alibaba Group vs. SHIP HEALTHCARE HLDGINC |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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