Correlation Between Weibo Corp and Bayer AG
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Bayer AG 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 Bayer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Bayer AG, you can compare the effects of market volatilities on Weibo Corp and Bayer AG 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 Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Bayer AG.
Diversification Opportunities for Weibo Corp and Bayer AG
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Weibo and Bayer is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Bayer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG 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 Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG has no effect on the direction of Weibo Corp i.e., Weibo Corp and Bayer AG go up and down completely randomly.
Pair Corralation between Weibo Corp and Bayer AG
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 0.9 times more return on investment than Bayer AG. However, Weibo Corp is 1.11 times less risky than Bayer AG. It trades about 0.03 of its potential returns per unit of risk. Bayer AG is currently generating about -0.39 per unit of risk. If you would invest 911.00 in Weibo Corp on August 24, 2024 and sell it today you would earn a total of 7.00 from holding Weibo Corp or generate 0.77% 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. Bayer AG
Performance |
| Timeline |
| Weibo Corp |
| Bayer AG |
Weibo Corp and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Bayer AG
The main advantage of trading using opposite Weibo Corp and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG's long position.| Weibo Corp vs. Twilio Inc | Weibo Corp vs. Baidu Inc | Weibo Corp vs. Snap Inc | Weibo Corp vs. ANGI Homeservices |
| Bayer AG vs. Kaiser Aluminum | Bayer AG vs. Iridium Communications | Bayer AG vs. Weibo Corp | Bayer AG vs. Maanshan Iron Steel |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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