Correlation Between RMR and EXp World

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

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

Diversification Opportunities for RMR and EXp World

0.01

Correlation Coefficient

RMR  EXp World

Significant diversification

The 3 months correlation between RMR and EXp is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding RMR Group 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 RMR 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 RMR Group 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 RMR i.e., RMR and EXp World go up and down completely randomly.

Pair Corralation between RMR and EXp World

Considering the 90-day investment horizon RMR Group is expected to under-perform the EXp World. But the stock apears to be less risky and, when comparing its historical volatility, RMR Group is 2.01 times less risky than EXp World. The stock trades about -0.08 of its potential returns per unit of risk. The eXp World Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,306  in eXp World Holdings on September 12, 2024 and sell it today you would earn a total of  3.00  from holding eXp World Holdings or generate 0.23% return on investment over 90 days.

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

RMR Group  vs.  eXp World Holdings

RMR Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RMR Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

eXp World Holdings

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in eXp World Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, EXp World is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with RMR and EXp World

The main advantage of trading using opposite RMR and EXp World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RMR 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 RMR Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.