Correlation Between Offerpad Solutions and WeWork

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

By analyzing existing cross correlation between Offerpad Solutions and WeWork Inc, you can compare the effects of market volatilities on Offerpad Solutions and WeWork 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 WeWork. Check out your portfolio center. Please also check ongoing floating volatility patterns of Offerpad Solutions and WeWork.

Diversification Opportunities for Offerpad Solutions and WeWork

0.55

Correlation Coefficient

Offerpad Solutions  WeWork

Very weak diversification

The 3 months correlation between Offerpad and WeWork is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Offerpad Solutions and WeWork Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WeWork Inc 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 WeWork. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WeWork Inc has no effect on the direction of Offerpad Solutions i.e., Offerpad Solutions and WeWork go up and down completely randomly.

Pair Corralation between Offerpad Solutions and WeWork

If you would invest  312.00  in Offerpad Solutions on September 2, 2024 and sell it today you would earn a total of  181.00  from holding Offerpad Solutions or generate 58.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Offerpad Solutions  vs.  WeWork Inc

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.

WeWork Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WeWork Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, WeWork is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Offerpad Solutions and WeWork

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

The idea behind Offerpad Solutions and WeWork Inc 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.