Correlation Between Digi International and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both Digi International 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 Digi International and Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi International and Weibo Corp, you can compare the effects of market volatilities on Digi International 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 Digi International with a short position of Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and Weibo Corp.
Diversification Opportunities for Digi International and Weibo Corp
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Digi and Weibo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and Digi International 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 Digi International 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 Digi International i.e., Digi International and Weibo Corp go up and down completely randomly.
Pair Corralation between Digi International and Weibo Corp
Given the investment horizon of 90 days Digi International is expected to generate 0.9 times more return on investment than Weibo Corp. However, Digi International is 1.11 times less risky than Weibo Corp. It trades about 0.17 of its potential returns per unit of risk. Weibo Corp is currently generating about 0.06 per unit of risk. If you would invest 2,983 in Digi International on August 31, 2024 and sell it today you would earn a total of 284.00 from holding Digi International or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digi International vs. Weibo Corp
Performance |
| Timeline |
| Digi International |
| Weibo Corp |
Digi International and Weibo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digi International and Weibo Corp
The main advantage of trading using opposite Digi International and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International 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.| Digi International vs. Extreme Networks | Digi International vs. Ciena Corp | Digi International vs. Harmonic | Digi International vs. Comtech Telecommunications Corp |
| Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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