Correlation Between Weibo Corp and Oakworth Capital

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

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

Diversification Opportunities for Weibo Corp and Oakworth Capital

-0.03

Correlation Coefficient

Weibo Corp  Oakworth Capital

Good diversification

The 3 months correlation between Weibo and Oakworth is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Oakworth Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakworth Capital 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 Oakworth Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakworth Capital has no effect on the direction of Weibo Corp i.e., Weibo Corp and Oakworth Capital go up and down completely randomly.

Pair Corralation between Weibo Corp and Oakworth Capital

Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 2.45 times more return on investment than Oakworth Capital. However, Weibo Corp is 2.45 times more volatile than Oakworth Capital. It trades about 0.07 of its potential returns per unit of risk. Oakworth Capital is currently generating about -0.04 per unit of risk. If you would invest  985.00  in Weibo Corp on December 19, 2024 and sell it today you would earn a total of  100.00  from holding Weibo Corp or generate 10.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Weibo Corp  vs.  Oakworth Capital

Weibo Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Weibo Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Weibo Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Oakworth Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oakworth Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Oakworth Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Weibo Corp and Oakworth Capital

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

The idea behind Weibo Corp and Oakworth Capital 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.