Correlation Between Newmark and Opendoor Technologies

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

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

Diversification Opportunities for Newmark and Opendoor Technologies

0.05

Correlation Coefficient

Newmark  Opendoor Technologies

Significant diversification

The 3 months correlation between Newmark and Opendoor is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Newmark Group and Opendoor Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opendoor Technologies and Newmark 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 Newmark Group 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 Newmark i.e., Newmark and Opendoor Technologies go up and down completely randomly.

Pair Corralation between Newmark and Opendoor Technologies

Given the investment horizon of 90 days Newmark is expected to generate 2.03 times less return on investment than Opendoor Technologies. But when comparing it to its historical volatility, Newmark Group is 2.73 times less risky than Opendoor Technologies. It trades about 0.11 of its potential returns per unit of risk. Opendoor Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  194.00  in Opendoor Technologies on September 2, 2024 and sell it today you would earn a total of  40.00  from holding Opendoor Technologies or generate 20.62% return on investment over 90 days.

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

Newmark Group  vs.  Opendoor Technologies

Newmark Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newmark Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Newmark may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Opendoor Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Opendoor Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Opendoor Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Newmark and Opendoor Technologies

The main advantage of trading using opposite Newmark and Opendoor Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmark 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 Newmark Group 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.

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.