Correlation Between Nextdoor Holdings and Twilio
Can any of the company-specific risk be diversified away by investing in both Nextdoor Holdings and Twilio 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 Nextdoor Holdings and Twilio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextdoor Holdings and Twilio Inc, you can compare the effects of market volatilities on Nextdoor Holdings and Twilio 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 Nextdoor Holdings with a short position of Twilio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextdoor Holdings and Twilio.
Diversification Opportunities for Nextdoor Holdings and Twilio
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nextdoor and Twilio is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nextdoor Holdings and Twilio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twilio Inc and Nextdoor Holdings 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 Nextdoor Holdings are associated (or correlated) with Twilio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twilio Inc has no effect on the direction of Nextdoor Holdings i.e., Nextdoor Holdings and Twilio go up and down completely randomly.
Pair Corralation between Nextdoor Holdings and Twilio
Given the investment horizon of 90 days Nextdoor Holdings is expected to generate 6.23 times less return on investment than Twilio. In addition to that, Nextdoor Holdings is 1.07 times more volatile than Twilio Inc. It trades about 0.09 of its total potential returns per unit of risk. Twilio Inc is currently generating about 0.57 per unit of volatility. If you would invest 7,059 in Twilio Inc on August 27, 2024 and sell it today you would earn a total of 3,376 from holding Twilio Inc or generate 47.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextdoor Holdings vs. Twilio Inc
Performance |
| Timeline |
| Nextdoor Holdings |
| Twilio Inc |
Nextdoor Holdings and Twilio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextdoor Holdings and Twilio
The main advantage of trading using opposite Nextdoor Holdings and Twilio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextdoor Holdings position performs unexpectedly, Twilio 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 Twilio will offset losses from the drop in Twilio's long position.| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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