Correlation Between Offerpad Solutions and EXp World

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

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

Diversification Opportunities for Offerpad Solutions and EXp World

0.49

Correlation Coefficient

Offerpad Solutions  EXp World

Very weak diversification

The 3 months correlation between Offerpad and EXp is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Offerpad Solutions 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 Offerpad Solutions 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 Offerpad Solutions 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 Offerpad Solutions i.e., Offerpad Solutions and EXp World go up and down completely randomly.

Pair Corralation between Offerpad Solutions and EXp World

Given the investment horizon of 90 days Offerpad Solutions is expected to generate 1.87 times more return on investment than EXp World. However, Offerpad Solutions is 1.87 times more volatile than eXp World Holdings. It trades about 0.1 of its potential returns per unit of risk. eXp World Holdings is currently generating about 0.12 per unit of risk. If you would invest  359.00  in Offerpad Solutions on September 3, 2024 and sell it today you would earn a total of  109.00  from holding Offerpad Solutions or generate 30.36% return on investment over 90 days.

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

Offerpad Solutions  vs.  eXp World Holdings

Offerpad Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Offerpad Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Offerpad Solutions exhibited solid returns over the last few months and may actually be approaching a breakup point.

eXp World Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in eXp World Holdings are ranked lower than 9 (%) 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.

Pair Trading with Offerpad Solutions and EXp World

The main advantage of trading using opposite Offerpad Solutions and EXp World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Offerpad Solutions 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 Offerpad Solutions 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.