Correlation Between Grocery Outlet and Weibo Corp

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

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

Diversification Opportunities for Grocery Outlet and Weibo Corp

-0.08

Correlation Coefficient

Grocery Outlet  Weibo Corp

Good diversification

The 3 months correlation between Grocery and Weibo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and Grocery Outlet 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 Grocery Outlet Holding 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 Grocery Outlet i.e., Grocery Outlet and Weibo Corp go up and down completely randomly.

Pair Corralation between Grocery Outlet and Weibo Corp

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Weibo Corp. In addition to that, Grocery Outlet is 1.73 times more volatile than Weibo Corp. It trades about -0.24 of its total potential returns per unit of risk. Weibo Corp is currently generating about -0.32 per unit of volatility. If you would invest  1,057  in Weibo Corp on October 10, 2024 and sell it today you would lose (129.00) from holding Weibo Corp or give up 12.2% of portfolio value over 90 days.

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

Grocery Outlet Holding  vs.  Weibo Corp

Grocery Outlet Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Grocery Outlet 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 latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Grocery Outlet and Weibo Corp

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