Correlation Between Rail Vision and Nextdoor Holdings

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

By analyzing existing cross correlation between Rail Vision Ltd and Nextdoor Holdings, you can compare the effects of market volatilities on Rail Vision 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 Rail Vision with a short position of Nextdoor Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rail Vision and Nextdoor Holdings.

Diversification Opportunities for Rail Vision and Nextdoor Holdings

-0.14

Correlation Coefficient

Rail Vision  Nextdoor Holdings

Good diversification

The 3 months correlation between Rail and Nextdoor is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Rail Vision Ltd and Nextdoor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextdoor Holdings and Rail Vision 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 Rail Vision Ltd 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 Rail Vision i.e., Rail Vision and Nextdoor Holdings go up and down completely randomly.

Pair Corralation between Rail Vision and Nextdoor Holdings

Assuming the 90 days horizon Rail Vision Ltd is expected to generate 25.06 times more return on investment than Nextdoor Holdings. However, Rail Vision is 25.06 times more volatile than Nextdoor Holdings. It trades about 0.32 of its potential returns per unit of risk. Nextdoor Holdings is currently generating about -0.16 per unit of risk. If you would invest  6.50  in Rail Vision Ltd on October 13, 2024 and sell it today you would earn a total of  21.50  from holding Rail Vision Ltd or generate 330.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.47%
Values	Daily Returns

Rail Vision Ltd  vs.  Nextdoor Holdings

Rail Vision

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rail Vision Ltd are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Rail Vision showed solid returns over the last few months and may actually be approaching a breakup point.

Nextdoor Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextdoor Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Nextdoor Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Rail Vision and Nextdoor Holdings

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

The idea behind Rail Vision Ltd and Nextdoor Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.