Correlation Between Arrow Financial and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both Arrow Financial 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 Arrow Financial and Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Financial and Weibo Corp, you can compare the effects of market volatilities on Arrow Financial 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 Arrow Financial with a short position of Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Financial and Weibo Corp.
Diversification Opportunities for Arrow Financial and Weibo Corp
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Arrow and Weibo is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and Arrow Financial 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 Arrow Financial 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 has no effect on the direction of Arrow Financial i.e., Arrow Financial and Weibo Corp go up and down completely randomly.
Pair Corralation between Arrow Financial and Weibo Corp
Given the investment horizon of 90 days Arrow Financial is expected to under-perform the Weibo Corp. But the stock apears to be less risky and, when comparing its historical volatility, Arrow Financial is 2.62 times less risky than Weibo Corp. The stock trades about -0.27 of its potential returns per unit of risk. The Weibo Corp is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 862.00 in Weibo Corp on September 12, 2024 and sell it today you would earn a total of 167.00 from holding Weibo Corp or generate 19.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Financial vs. Weibo Corp
Performance |
| Timeline |
| Arrow Financial |
| Weibo Corp |
Arrow Financial and Weibo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Financial and Weibo Corp
The main advantage of trading using opposite Arrow Financial and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Financial 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.| Arrow Financial vs. Heritage Commerce Corp | Arrow Financial vs. Westamerica Bancorporation | Arrow Financial vs. Heritage Financial | Arrow Financial vs. National Bankshares |
| Weibo Corp vs. Twilio Inc | Weibo Corp vs. Meta Platforms | Weibo Corp vs. Alphabet Inc Class C | Weibo Corp vs. Alphabet Inc Class A |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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