Correlation Between Marcus Millichap and EXp World

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

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

Diversification Opportunities for Marcus Millichap and EXp World

0.3

Correlation Coefficient

Marcus Millichap  EXp World

Weak diversification

The 3 months correlation between Marcus and EXp is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Marcus Millichap and eXp World Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eXp World Holdings and Marcus Millichap 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 Marcus Millichap are associated (or correlated) with EXp World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eXp World Holdings has no effect on the direction of Marcus Millichap i.e., Marcus Millichap and EXp World go up and down completely randomly.

Pair Corralation between Marcus Millichap and EXp World

Considering the 90-day investment horizon Marcus Millichap is expected to generate 0.83 times more return on investment than EXp World. However, Marcus Millichap is 1.2 times less risky than EXp World. It trades about -0.04 of its potential returns per unit of risk. eXp World Holdings is currently generating about -0.08 per unit of risk. If you would invest  3,769  in Marcus Millichap on December 27, 2024 and sell it today you would lose (211.00) from holding Marcus Millichap or give up 5.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Marcus Millichap  vs.  eXp World Holdings

Marcus Millichap

Risk-Adjusted Performance

Very Weak

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

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 latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Marcus Millichap and EXp World

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

The idea behind Marcus Millichap and eXp World 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.