Correlation Between Baidu and Trivago NV
Can any of the company-specific risk be diversified away by investing in both Baidu and Trivago NV 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 Trivago NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Trivago NV, you can compare the effects of market volatilities on Baidu and Trivago NV 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 Trivago NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Trivago NV.
Diversification Opportunities for Baidu and Trivago NV
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baidu and Trivago is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Trivago NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trivago NV 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 Trivago NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trivago NV has no effect on the direction of Baidu i.e., Baidu and Trivago NV go up and down completely randomly.
Pair Corralation between Baidu and Trivago NV
Given the investment horizon of 90 days Baidu Inc is expected to under-perform the Trivago NV. But the stock apears to be less risky and, when comparing its historical volatility, Baidu Inc is 1.01 times less risky than Trivago NV. The stock trades about -0.32 of its potential returns per unit of risk. The Trivago NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 165.00 in Trivago NV on August 27, 2024 and sell it today you would earn a total of 3.00 from holding Trivago NV or generate 1.82% 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. Trivago NV
Performance |
| Timeline |
| Baidu Inc |
| Trivago NV |
Baidu and Trivago NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Trivago NV
The main advantage of trading using opposite Baidu and Trivago NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Trivago NV 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 Trivago NV will offset losses from the drop in Trivago NV's long position.| Baidu vs. Tencent Music Entertainment | Baidu vs. Twilio Inc | Baidu vs. Spotify Technology SA | Baidu vs. Weibo Corp |
| Trivago NV vs. Alphabet Inc Class C | Trivago NV vs. Twilio Inc | Trivago NV vs. Snap Inc | Trivago NV vs. Baidu Inc |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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