Correlation Between Weibo Corp and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Asbury Automotive 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 Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Asbury Automotive Group, you can compare the effects of market volatilities on Weibo Corp and Asbury Automotive 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 Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Asbury Automotive.
Diversification Opportunities for Weibo Corp and Asbury Automotive
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Weibo and Asbury is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive 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 Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of Weibo Corp i.e., Weibo Corp and Asbury Automotive go up and down completely randomly.
Pair Corralation between Weibo Corp and Asbury Automotive
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 2.0 times less return on investment than Asbury Automotive. In addition to that, Weibo Corp is 1.34 times more volatile than Asbury Automotive Group. It trades about 0.11 of its total potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.28 per unit of volatility. If you would invest 22,784 in Asbury Automotive Group on September 1, 2024 and sell it today you would earn a total of 3,199 from holding Asbury Automotive Group or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. Asbury Automotive Group
Performance |
| Timeline |
| Weibo Corp |
| Asbury Automotive |
Weibo Corp and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Asbury Automotive
The main advantage of trading using opposite Weibo Corp and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Asbury Automotive 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 Asbury Automotive will offset losses from the drop in Asbury Automotive's long position.| Weibo Corp vs. MediaAlpha | Weibo Corp vs. Asset Entities Class | Weibo Corp vs. Yelp Inc | Weibo Corp vs. Shutterstock |
| Asbury Automotive vs. Advance Auto Parts | Asbury Automotive vs. Tractor Supply | Asbury Automotive vs. Genuine Parts Co | Asbury Automotive vs. Five Below |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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