Correlation Between Weibo Corp and TrueCar
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and TrueCar 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 TrueCar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and TrueCar, you can compare the effects of market volatilities on Weibo Corp and TrueCar 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 TrueCar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and TrueCar.
Diversification Opportunities for Weibo Corp and TrueCar
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Weibo and TrueCar is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and TrueCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueCar 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 TrueCar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueCar has no effect on the direction of Weibo Corp i.e., Weibo Corp and TrueCar go up and down completely randomly.
Pair Corralation between Weibo Corp and TrueCar
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 0.87 times more return on investment than TrueCar. However, Weibo Corp is 1.15 times less risky than TrueCar. It trades about 0.13 of its potential returns per unit of risk. TrueCar is currently generating about -0.01 per unit of risk. If you would invest 926.00 in Weibo Corp on November 4, 2024 and sell it today you would earn a total of 56.00 from holding Weibo Corp or generate 6.05% 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. TrueCar
Performance |
| Timeline |
| Weibo Corp |
| TrueCar |
Weibo Corp and TrueCar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and TrueCar
The main advantage of trading using opposite Weibo Corp and TrueCar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, TrueCar 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 TrueCar will offset losses from the drop in TrueCar'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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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