Correlation Between Weibo Corp and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Weibo Corp and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Dow Jones.
Diversification Opportunities for Weibo Corp and Dow Jones
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weibo and Dow is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Weibo Corp i.e., Weibo Corp and Dow Jones go up and down completely randomly.
Pair Corralation between Weibo Corp and Dow Jones
Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the Dow Jones. In addition to that, Weibo Corp is 4.21 times more volatile than Dow Jones Industrial. It trades about -0.04 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.14 per unit of volatility. If you would invest 3,355,027 in Dow Jones Industrial on June 23, 2024 and sell it today you would earn a total of 851,309 from holding Dow Jones Industrial or generate 25.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Weibo Corp vs. Dow Jones Industrial
Performance |
Timeline |
Weibo Corp and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Weibo Corp
Pair trading matchups for Weibo Corp
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Weibo Corp and Dow Jones
The main advantage of trading using opposite Weibo Corp and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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