Correlation Between Weibo Corp and American Airlines
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and American Airlines 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 American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and American Airlines Group, you can compare the effects of market volatilities on Weibo Corp and American Airlines 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 American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and American Airlines.
Diversification Opportunities for Weibo Corp and American Airlines
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Weibo and American is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines 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 American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Weibo Corp i.e., Weibo Corp and American Airlines go up and down completely randomly.
Pair Corralation between Weibo Corp and American Airlines
Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the American Airlines. In addition to that, Weibo Corp is 1.29 times more volatile than American Airlines Group. It trades about -0.01 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.01 per unit of volatility. If you would invest 1,530 in American Airlines Group on August 31, 2024 and sell it today you would lose (78.00) from holding American Airlines Group or give up 5.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. American Airlines Group
Performance |
| Timeline |
| Weibo Corp |
| American Airlines |
Weibo Corp and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and American Airlines
The main advantage of trading using opposite Weibo Corp and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. United Airlines Holdings |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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