Correlation Between Expensify and Vacasa

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

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

Diversification Opportunities for Expensify and Vacasa

0.87

Correlation Coefficient

Expensify  Vacasa

Very poor diversification

The 3 months correlation between Expensify and Vacasa is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Expensify and Vacasa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vacasa Inc and Expensify 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 Expensify are associated (or correlated) with Vacasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vacasa Inc has no effect on the direction of Expensify i.e., Expensify and Vacasa go up and down completely randomly.

Pair Corralation between Expensify and Vacasa

Given the investment horizon of 90 days Expensify is expected to generate 0.53 times more return on investment than Vacasa. However, Expensify is 1.89 times less risky than Vacasa. It trades about 0.13 of its potential returns per unit of risk. Vacasa Inc is currently generating about 0.05 per unit of risk. If you would invest  334.00  in Expensify on September 27, 2024 and sell it today you would earn a total of  27.00  from holding Expensify or generate 8.08% return on investment over 90 days.

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

Expensify  vs.  Vacasa Inc

Expensify

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Expensify are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Expensify showed solid returns over the last few months and may actually be approaching a breakup point.

Vacasa Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vacasa Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Vacasa sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Expensify and Vacasa

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

The idea behind Expensify and Vacasa 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.