Correlation Between EXp World and Offerpad Solutions

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

By analyzing existing cross correlation between eXp World Holdings and Offerpad Solutions, you can compare the effects of market volatilities on EXp World and Offerpad Solutions 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 EXp World with a short position of Offerpad Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of EXp World and Offerpad Solutions.

Diversification Opportunities for EXp World and Offerpad Solutions

0.49

Correlation Coefficient

EXp World  Offerpad Solutions

Very weak diversification

The 3 months correlation between EXp and Offerpad is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding eXp World Holdings and Offerpad Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Offerpad Solutions and EXp World 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 eXp World Holdings are associated (or correlated) with Offerpad Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Offerpad Solutions has no effect on the direction of EXp World i.e., EXp World and Offerpad Solutions go up and down completely randomly.

Pair Corralation between EXp World and Offerpad Solutions

Given the investment horizon of 90 days EXp World is expected to generate 2.03 times less return on investment than Offerpad Solutions. But when comparing it to its historical volatility, eXp World Holdings is 1.86 times less risky than Offerpad Solutions. It trades about 0.11 of its potential returns per unit of risk. Offerpad Solutions is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  359.00  in Offerpad Solutions on September 2, 2024 and sell it today you would earn a total of  134.00  from holding Offerpad Solutions or generate 37.33% return on investment over 90 days.

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

eXp World Holdings  vs.  Offerpad Solutions

eXp World Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in eXp World Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, EXp World demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Offerpad Solutions

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Offerpad Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Offerpad Solutions exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EXp World and Offerpad Solutions

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

The idea behind eXp World Holdings and Offerpad Solutions 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.