Correlation Between Simon Property and Weibo Corp

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

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

Diversification Opportunities for Simon Property and Weibo Corp

-0.31

Correlation Coefficient

Simon Property  Weibo Corp

Very good diversification

The 3 months correlation between Simon and Weibo is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and Simon Property 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 Simon Property Group 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 Simon Property i.e., Simon Property and Weibo Corp go up and down completely randomly.

Pair Corralation between Simon Property and Weibo Corp

Assuming the 90 days trading horizon Simon Property Group is expected to under-perform the Weibo Corp. But the preferred stock apears to be less risky and, when comparing its historical volatility, Simon Property Group is 2.37 times less risky than Weibo Corp. The preferred stock trades about -0.06 of its potential returns per unit of risk. The Weibo Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  921.00  in Weibo Corp on October 26, 2024 and sell it today you would earn a total of  13.00  from holding Weibo Corp or generate 1.41% return on investment over 90 days.

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

Simon Property Group  vs.  Weibo Corp

Simon Property Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simon Property Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady technical and fundamental indicators, Simon Property is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Weibo Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Weibo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Weibo Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Simon Property and Weibo Corp

The main advantage of trading using opposite Simon Property and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property 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 Simon Property Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.