Correlation Between Funko and Weibo Corp

Can any of the company-specific risk be diversified away by investing in both Funko 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 Funko and Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Funko Inc and Weibo Corp, you can compare the effects of market volatilities on Funko 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 Funko with a short position of Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and Weibo Corp.

Diversification Opportunities for Funko and Weibo Corp

0.46

Correlation Coefficient

Funko  Weibo Corp

Very weak diversification

The 3 months correlation between Funko and Weibo is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and Funko 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 Funko Inc 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 Funko i.e., Funko and Weibo Corp go up and down completely randomly.

Pair Corralation between Funko and Weibo Corp

Given the investment horizon of 90 days Funko Inc is expected to generate 1.04 times more return on investment than Weibo Corp. However, Funko is 1.04 times more volatile than Weibo Corp. It trades about 0.27 of its potential returns per unit of risk. Weibo Corp is currently generating about -0.04 per unit of risk. If you would invest  1,182  in Funko Inc on October 5, 2024 and sell it today you would earn a total of  179.00  from holding Funko Inc or generate 15.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Funko Inc  vs.  Weibo Corp

Funko Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, Funko may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Weibo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weibo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Funko and Weibo Corp

The main advantage of trading using opposite Funko and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko 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.

The idea behind Funko Inc and Weibo Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.