Correlation Between Weibo Corp and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and CenterPoint Energy 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 CenterPoint Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and CenterPoint Energy, you can compare the effects of market volatilities on Weibo Corp and CenterPoint Energy 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 CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and CenterPoint Energy.
Diversification Opportunities for Weibo Corp and CenterPoint Energy
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weibo and CenterPoint is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy 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 CenterPoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CenterPoint Energy has no effect on the direction of Weibo Corp i.e., Weibo Corp and CenterPoint Energy go up and down completely randomly.
Pair Corralation between Weibo Corp and CenterPoint Energy
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 1.17 times less return on investment than CenterPoint Energy. In addition to that, Weibo Corp is 3.36 times more volatile than CenterPoint Energy. It trades about 0.05 of its total potential returns per unit of risk. CenterPoint Energy is currently generating about 0.21 per unit of volatility. If you would invest 2,843 in CenterPoint Energy on August 26, 2024 and sell it today you would earn a total of 350.00 from holding CenterPoint Energy or generate 12.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. CenterPoint Energy
Performance |
| Timeline |
| Weibo Corp |
| CenterPoint Energy |
Weibo Corp and CenterPoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and CenterPoint Energy
The main advantage of trading using opposite Weibo Corp and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, CenterPoint Energy 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 CenterPoint Energy will offset losses from the drop in CenterPoint Energy's long position.| Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
| CenterPoint Energy vs. Entergy | CenterPoint Energy vs. Ameren Corp | CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Pinnacle West Capital |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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