Correlation Between Weibo Corp and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and RBC Bearings 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 RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and RBC Bearings Incorporated, you can compare the effects of market volatilities on Weibo Corp and RBC Bearings 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 RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and RBC Bearings.
Diversification Opportunities for Weibo Corp and RBC Bearings
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Weibo and RBC is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings 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 RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings has no effect on the direction of Weibo Corp i.e., Weibo Corp and RBC Bearings go up and down completely randomly.
Pair Corralation between Weibo Corp and RBC Bearings
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 1.88 times more return on investment than RBC Bearings. However, Weibo Corp is 1.88 times more volatile than RBC Bearings Incorporated. It trades about 0.04 of its potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.07 per unit of risk. If you would invest 812.00 in Weibo Corp on November 3, 2024 and sell it today you would earn a total of 170.00 from holding Weibo Corp or generate 20.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. RBC Bearings Incorporated
Performance |
| Timeline |
| Weibo Corp |
| RBC Bearings |
Weibo Corp and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and RBC Bearings
The main advantage of trading using opposite Weibo Corp and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, RBC Bearings 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 RBC Bearings will offset losses from the drop in RBC Bearings' long position.| Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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