Correlation Between E Home and Airbnb

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

By analyzing existing cross correlation between E Home Household Service and Airbnb Inc, you can compare the effects of market volatilities on E Home and Airbnb 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 E Home with a short position of Airbnb. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Home and Airbnb.

Diversification Opportunities for E Home and Airbnb

-0.64

Correlation Coefficient

E Home  Airbnb

Excellent diversification

The 3 months correlation between EJH and Airbnb is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding E Home Household Service and Airbnb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbnb Inc and E Home 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 E Home Household Service are associated (or correlated) with Airbnb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbnb Inc has no effect on the direction of E Home i.e., E Home and Airbnb go up and down completely randomly.

Pair Corralation between E Home and Airbnb

Considering the 90-day investment horizon E Home Household Service is expected to under-perform the Airbnb. In addition to that, E Home is 3.0 times more volatile than Airbnb Inc. It trades about -0.01 of its total potential returns per unit of risk. Airbnb Inc is currently generating about 0.14 per unit of volatility. If you would invest  11,731  in Airbnb Inc on August 30, 2024 and sell it today you would earn a total of  2,097  from holding Airbnb Inc or generate 17.88% return on investment over 90 days.

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

E Home Household Service  vs.  Airbnb Inc

E Home Household

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E Home Household Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking indicators, E Home is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Airbnb Inc

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Airbnb Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Airbnb sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with E Home and Airbnb

The main advantage of trading using opposite E Home and Airbnb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Home position performs unexpectedly, Airbnb 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 Airbnb will offset losses from the drop in Airbnb's long position.

The idea behind E Home Household Service and Airbnb 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.