Correlation Between Quad Graphics and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both Quad Graphics and Weibo Corp 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 Quad Graphics and Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quad Graphics and Weibo Corp, you can compare the effects of market volatilities on Quad Graphics and Weibo Corp 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 Quad Graphics with a short position of Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quad Graphics and Weibo Corp.
Diversification Opportunities for Quad Graphics and Weibo Corp
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Quad and Weibo is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Quad Graphics and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and Quad Graphics 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 Quad Graphics are associated (or correlated) with Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp has no effect on the direction of Quad Graphics i.e., Quad Graphics and Weibo Corp go up and down completely randomly.
Pair Corralation between Quad Graphics and Weibo Corp
Given the investment horizon of 90 days Quad Graphics is expected to under-perform the Weibo Corp. But the stock apears to be less risky and, when comparing its historical volatility, Quad Graphics is 1.26 times less risky than Weibo Corp. The stock trades about -0.27 of its potential returns per unit of risk. The Weibo Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 863.00 in Weibo Corp on January 27, 2024 and sell it today you would lose (20.00) from holding Weibo Corp or give up 2.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quad Graphics vs. Weibo Corp
Performance |
| Timeline |
| Quad Graphics |
| Weibo Corp |
Quad Graphics and Weibo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quad Graphics and Weibo Corp
The main advantage of trading using opposite Quad Graphics and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quad Graphics position performs unexpectedly, Weibo Corp 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 Weibo Corp will offset losses from the drop in Weibo Corp's long position.| Quad Graphics vs. Network 1 Technologies | Quad Graphics vs. Rentokil Initial PLC | Quad Graphics vs. Mader Group Limited | Quad Graphics vs. SPAR Group |
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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