Correlation Between SP Global and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both SP Global 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 SP Global and Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP Global and Weibo Corp, you can compare the effects of market volatilities on SP Global 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 SP Global with a short position of Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Global and Weibo Corp.
Diversification Opportunities for SP Global and Weibo Corp
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPGI and Weibo is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SP Global and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and SP Global 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 SP Global 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 SP Global i.e., SP Global and Weibo Corp go up and down completely randomly.
Pair Corralation between SP Global and Weibo Corp
Given the investment horizon of 90 days SP Global is expected to generate 0.3 times more return on investment than Weibo Corp. However, SP Global is 3.37 times less risky than Weibo Corp. It trades about -0.14 of its potential returns per unit of risk. Weibo Corp is currently generating about -0.07 per unit of risk. If you would invest 42,603 in SP Global on January 20, 2024 and sell it today you would lose (1,266) from holding SP Global or give up 2.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
SP Global vs. Weibo Corp
Performance |
| Timeline |
| SP Global |
| Weibo Corp |
SP Global and Weibo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP Global and Weibo Corp
The main advantage of trading using opposite SP Global and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Global 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.| SP Global vs. MSCI Inc | SP Global vs. Nasdaq Inc | SP Global vs. Intercontinental Exchange | SP Global vs. CME 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 Stocks Directory module to find actively traded stocks across global markets.
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