Correlation Between Baidu and EverQuote
Can any of the company-specific risk be diversified away by investing in both Baidu and EverQuote 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 Baidu and EverQuote into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and EverQuote Class A, you can compare the effects of market volatilities on Baidu and EverQuote 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 Baidu with a short position of EverQuote. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and EverQuote.
Diversification Opportunities for Baidu and EverQuote
Good diversification
The 3 months correlation between Baidu and EverQuote is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and EverQuote Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EverQuote Class A and Baidu 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 Baidu Inc are associated (or correlated) with EverQuote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EverQuote Class A has no effect on the direction of Baidu i.e., Baidu and EverQuote go up and down completely randomly.
Pair Corralation between Baidu and EverQuote
Given the investment horizon of 90 days Baidu Inc is expected to under-perform the EverQuote. But the stock apears to be less risky and, when comparing its historical volatility, Baidu Inc is 2.35 times less risky than EverQuote. The stock trades about -0.21 of its potential returns per unit of risk. The EverQuote Class A is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,777 in EverQuote Class A on August 26, 2024 and sell it today you would earn a total of 138.00 from holding EverQuote Class A or generate 7.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baidu Inc vs. EverQuote Class A
Performance |
| Timeline |
| Baidu Inc |
| EverQuote Class A |
Baidu and EverQuote Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and EverQuote
The main advantage of trading using opposite Baidu and EverQuote positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, EverQuote 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 EverQuote will offset losses from the drop in EverQuote's long position.| Baidu vs. Tencent Music Entertainment | Baidu vs. Twilio Inc | Baidu vs. Spotify Technology SA | Baidu vs. Weibo Corp |
| EverQuote vs. Onfolio Holdings | EverQuote vs. Vivid Seats | EverQuote vs. Asset Entities Class | EverQuote vs. Comscore |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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