Correlation Between EXp World and Opendoor Technologies

Can any of the company-specific risk be diversified away by investing in both EXp World and Opendoor Technologies 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 Opendoor Technologies 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 Opendoor Technologies, you can compare the effects of market volatilities on EXp World and Opendoor Technologies 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 Opendoor Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of EXp World and Opendoor Technologies.

Diversification Opportunities for EXp World and Opendoor Technologies

0.84

Correlation Coefficient

EXp World  Opendoor Technologies

Very poor diversification

The 3 months correlation between EXp and Opendoor is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding eXp World Holdings and Opendoor Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opendoor Technologies 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 Opendoor Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opendoor Technologies has no effect on the direction of EXp World i.e., EXp World and Opendoor Technologies go up and down completely randomly.

Pair Corralation between EXp World and Opendoor Technologies

Given the investment horizon of 90 days eXp World Holdings is expected to under-perform the Opendoor Technologies. But the stock apears to be less risky and, when comparing its historical volatility, eXp World Holdings is 1.69 times less risky than Opendoor Technologies. The stock trades about -0.08 of its potential returns per unit of risk. The Opendoor Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  163.00  in Opendoor Technologies on November 20, 2024 and sell it today you would lose (8.00) from holding Opendoor Technologies or give up 4.91% of portfolio value over 90 days.

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

eXp World Holdings  vs.  Opendoor Technologies

eXp World Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days eXp World Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Opendoor Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Opendoor Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Opendoor Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with EXp World and Opendoor Technologies

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

The idea behind eXp World Holdings and Opendoor Technologies 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.