Correlation Between Baidu and Nextdoor Holdings
Can any of the company-specific risk be diversified away by investing in both Baidu and Nextdoor Holdings 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 Nextdoor Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Nextdoor Holdings, you can compare the effects of market volatilities on Baidu and Nextdoor Holdings 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 Nextdoor Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Nextdoor Holdings.
Diversification Opportunities for Baidu and Nextdoor Holdings
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Baidu and Nextdoor is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Nextdoor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextdoor Holdings 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 Nextdoor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextdoor Holdings has no effect on the direction of Baidu i.e., Baidu and Nextdoor Holdings go up and down completely randomly.
Pair Corralation between Baidu and Nextdoor Holdings
Given the investment horizon of 90 days Baidu is expected to generate 1.59 times less return on investment than Nextdoor Holdings. In addition to that, Baidu is 1.29 times more volatile than Nextdoor Holdings. It trades about 0.15 of its total potential returns per unit of risk. Nextdoor Holdings is currently generating about 0.31 per unit of volatility. If you would invest 236.00 in Nextdoor Holdings on November 9, 2024 and sell it today you would earn a total of 38.00 from holding Nextdoor Holdings or generate 16.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baidu Inc vs. Nextdoor Holdings
Performance |
| Timeline |
| Baidu Inc |
| Nextdoor Holdings |
Baidu and Nextdoor Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Nextdoor Holdings
The main advantage of trading using opposite Baidu and Nextdoor Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Nextdoor Holdings 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 Nextdoor Holdings will offset losses from the drop in Nextdoor Holdings' long position.| Baidu vs. Tencent Music Entertainment | Baidu vs. Twilio Inc | Baidu vs. Spotify Technology SA | Baidu vs. Weibo Corp |
| Nextdoor Holdings vs. IAC Inc | Nextdoor Holdings vs. Yelp Inc | Nextdoor Holdings vs. Groupon | Nextdoor Holdings vs. Outbrain |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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