Correlation Between Twitter and Sirius XM

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Can any of the company-specific risk be diversified away by investing in both Twitter and Sirius XM 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 Twitter and Sirius XM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Twitter and Sirius XM Holdings, you can compare the effects of market volatilities on Twitter and Sirius XM 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 Twitter with a short position of Sirius XM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Twitter and Sirius XM.

Diversification Opportunities for Twitter and Sirius XM

  Correlation Coefficient

Weak diversification

The 3 months correlation between Twitter and Sirius is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Twitter and Sirius XM Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirius XM Holdings and Twitter 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 Twitter are associated (or correlated) with Sirius XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirius XM Holdings has no effect on the direction of Twitter i.e., Twitter and Sirius XM go up and down completely randomly.

Pair Corralation between Twitter and Sirius XM

Given the investment horizon of 90 days Twitter is expected to under-perform the Sirius XM. In addition to that, Twitter is 1.98 times more volatile than Sirius XM Holdings. It trades about -0.03 of its total potential returns per unit of risk. Sirius XM Holdings is currently generating about 0.01 per unit of volatility. If you would invest  588.00  in Sirius XM Holdings on June 26, 2022 and sell it today you would lose (7.00)  from holding Sirius XM Holdings or give up 1.19% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
ValuesDaily Returns

Twitter  vs.  Sirius XM Holdings

 Performance (%) 
Twitter Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Twitter are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Twitter may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Twitter Price Channel

Sirius XM Holdings 
Sirius Performance
0 of 100
Over the last 90 days Sirius XM Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sirius Price Channel

Twitter and Sirius XM Volatility Contrast

   Predicted Return Density   

Pair Trading with Twitter and Sirius XM

The main advantage of trading using opposite Twitter and Sirius XM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twitter position performs unexpectedly, Sirius XM 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 Sirius XM will offset losses from the drop in Sirius XM's long position.
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The idea behind Twitter and Sirius XM Holdings 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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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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