Correlation Between Re Max and WeWork

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

By analyzing existing cross correlation between Re Max Holding and WeWork Inc, you can compare the effects of market volatilities on Re Max 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 Re Max with a short position of WeWork. Check out your portfolio center. Please also check ongoing floating volatility patterns of Re Max and WeWork.

Diversification Opportunities for Re Max and WeWork

-0.22

Correlation Coefficient

Re Max  WeWork

Very good diversification

The 3 months correlation between RMAX and WeWork is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Re Max Holding and WeWork Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WeWork Inc and Re Max 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 Re Max Holding 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 Re Max i.e., Re Max and WeWork go up and down completely randomly.

Pair Corralation between Re Max and WeWork

If you would invest  1,124  in Re Max Holding on September 2, 2024 and sell it today you would earn a total of  192.00  from holding Re Max Holding or generate 17.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Re Max Holding  vs.  WeWork Inc

Re Max Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Re Max Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Re Max showed 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 Re Max and WeWork

The main advantage of trading using opposite Re Max and WeWork positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Re Max 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 Re Max Holding 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.

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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.