Correlation Between EverQuote and Baidu

Can any of the company-specific risk be diversified away by investing in both EverQuote 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 EverQuote and Baidu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EverQuote Class A and Baidu Inc, you can compare the effects of market volatilities on EverQuote 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 EverQuote with a short position of Baidu. Check out your portfolio center. Please also check ongoing floating volatility patterns of EverQuote and Baidu.

Diversification Opportunities for EverQuote and Baidu

-0.35

Correlation Coefficient

EverQuote  Baidu

Very good diversification

The 3 months correlation between EverQuote and Baidu is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding EverQuote Class A and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and EverQuote 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 EverQuote Class A 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 EverQuote i.e., EverQuote and Baidu go up and down completely randomly.

Pair Corralation between EverQuote and Baidu

Given the investment horizon of 90 days EverQuote Class A is expected to generate 2.05 times more return on investment than Baidu. However, EverQuote is 2.05 times more volatile than Baidu Inc. It trades about 0.09 of its potential returns per unit of risk. Baidu Inc is currently generating about -0.12 per unit of risk. If you would invest  1,856  in EverQuote Class A on January 28, 2024 and sell it today you would earn a total of  99.00  from holding EverQuote Class A or generate 5.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

EverQuote Class A  vs.  Baidu Inc

EverQuote Class A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EverQuote Class A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, EverQuote reported solid returns over the last few months and may actually be approaching a breakup point.

Baidu Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baidu Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Baidu is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EverQuote and Baidu

The main advantage of trading using opposite EverQuote and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EverQuote 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.

The idea behind EverQuote Class A and Baidu Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.