Correlation Between Weibo Corp and BANCO

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

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

Diversification Opportunities for Weibo Corp and BANCO

0.2

Correlation Coefficient

Weibo Corp  BANCO

Modest diversification

The 3 months correlation between Weibo and BANCO is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and BANCO SANTANDER SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANCO SANTANDER SA 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 BANCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANCO SANTANDER SA has no effect on the direction of Weibo Corp i.e., Weibo Corp and BANCO go up and down completely randomly.

Pair Corralation between Weibo Corp and BANCO

Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the BANCO. In addition to that, Weibo Corp is 1.2 times more volatile than BANCO SANTANDER SA. It trades about -0.31 of its total potential returns per unit of risk. BANCO SANTANDER SA is currently generating about -0.3 per unit of volatility. If you would invest  8,641  in BANCO SANTANDER SA on October 11, 2024 and sell it today you would lose (787.00) from holding BANCO SANTANDER SA or give up 9.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Weibo Corp  vs.  BANCO SANTANDER SA

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.

BANCO SANTANDER SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANCO SANTANDER SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BANCO SANTANDER SA investors.

Pair Trading with Weibo Corp and BANCO

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

The idea behind Weibo Corp and BANCO SANTANDER SA 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.