Correlation Between Weibo Corp and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Boston Beer 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 Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Boston Beer, you can compare the effects of market volatilities on Weibo Corp and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Boston Beer.
Diversification Opportunities for Weibo Corp and Boston Beer
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Weibo and Boston is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Weibo Corp i.e., Weibo Corp and Boston Beer go up and down completely randomly.
Pair Corralation between Weibo Corp and Boston Beer
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 2.0 times more return on investment than Boston Beer. However, Weibo Corp is 2.0 times more volatile than Boston Beer. It trades about 0.05 of its potential returns per unit of risk. Boston Beer is currently generating about 0.03 per unit of risk. If you would invest 851.00 in Weibo Corp on September 1, 2024 and sell it today you would earn a total of 109.00 from holding Weibo Corp or generate 12.81% 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. Boston Beer
Performance |
| Timeline |
| Weibo Corp |
| Boston Beer |
Weibo Corp and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Boston Beer
The main advantage of trading using opposite Weibo Corp and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.| Weibo Corp vs. MediaAlpha | Weibo Corp vs. Asset Entities Class | Weibo Corp vs. Shutterstock | Weibo Corp vs. Match Group |
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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 Stocks Directory module to find actively traded stocks across global markets.
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