Correlation Between Weibo Corp and Air Lease

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

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

Diversification Opportunities for Weibo Corp and Air Lease

0.02

Correlation Coefficient

Weibo Corp  Air Lease

Significant diversification

The 3 months correlation between Weibo and Air is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Weibo Corp 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 Weibo Corp are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Weibo Corp i.e., Weibo Corp and Air Lease go up and down completely randomly.

Pair Corralation between Weibo Corp and Air Lease

Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 1.66 times more return on investment than Air Lease. However, Weibo Corp is 1.66 times more volatile than Air Lease. It trades about 0.04 of its potential returns per unit of risk. Air Lease is currently generating about 0.04 per unit of risk. If you would invest  748.00  in Weibo Corp on October 14, 2024 and sell it today you would earn a total of  140.00  from holding Weibo Corp or generate 18.72% return on investment over 90 days.

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

Weibo Corp  vs.  Air Lease

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.

Air Lease

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Air Lease is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Weibo Corp and Air Lease

The main advantage of trading using opposite Weibo Corp and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.

The idea behind Weibo Corp and Air Lease 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.