Correlation Between Bank Of and Baidu
Can any of the company-specific risk be diversified away by investing in both Bank Of and Baidu 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 Bank Of and Baidu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Bank of and Baidu Inc, you can compare the effects of market volatilities on Bank Of and Baidu 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 Bank Of with a short position of Baidu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Of and Baidu.
Diversification Opportunities for Bank Of and Baidu
Modest diversification
The 3 months correlation between Bank and Baidu is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Bank Of 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 The Bank of are associated (or correlated) with Baidu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baidu Inc has no effect on the direction of Bank Of i.e., Bank Of and Baidu go up and down completely randomly.
Pair Corralation between Bank Of and Baidu
Assuming the 90 days trading horizon The Bank of is expected to generate 0.53 times more return on investment than Baidu. However, The Bank of is 1.9 times less risky than Baidu. It trades about 0.24 of its potential returns per unit of risk. Baidu Inc is currently generating about -0.02 per unit of risk. If you would invest 22,567 in The Bank of on August 24, 2024 and sell it today you would earn a total of 23,288 from holding The Bank of or generate 103.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.02% |
| Values | Daily Returns |
The Bank of vs. Baidu Inc
Performance |
| Timeline |
| The Bank |
| Baidu Inc |
Bank Of and Baidu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Of and Baidu
The main advantage of trading using opposite Bank Of and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Of position performs unexpectedly, Baidu 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 Baidu will offset losses from the drop in Baidu's long position.| Bank Of vs. Ameriprise Financial | Bank Of vs. Fras le SA | Bank Of vs. Clave Indices De | Bank Of vs. BTG Pactual Logstica |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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