Correlation Between Weibo Corp and IAC
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and IAC 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 IAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and IAC Inc, you can compare the effects of market volatilities on Weibo Corp and IAC 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 IAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and IAC.
Diversification Opportunities for Weibo Corp and IAC
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weibo and IAC is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and IAC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAC Inc 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 IAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAC Inc has no effect on the direction of Weibo Corp i.e., Weibo Corp and IAC go up and down completely randomly.
Pair Corralation between Weibo Corp and IAC
Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the IAC. In addition to that, Weibo Corp is 1.6 times more volatile than IAC Inc. It trades about -0.13 of its total potential returns per unit of risk. IAC Inc is currently generating about -0.13 per unit of volatility. If you would invest 4,319 in IAC Inc on October 26, 2024 and sell it today you would lose (133.00) from holding IAC Inc or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. IAC Inc
Performance |
| Timeline |
| Weibo Corp |
| IAC Inc |
Weibo Corp and IAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and IAC
The main advantage of trading using opposite Weibo Corp and IAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, IAC 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 IAC will offset losses from the drop in IAC'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 |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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