Correlation Between WeWork and Redfin Corp

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

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

Diversification Opportunities for WeWork and Redfin Corp

0.0

Correlation Coefficient

WeWork  Redfin Corp

Pay attention - limited upside

The 3 months correlation between WeWork and Redfin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WeWork Inc and Redfin Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redfin Corp and WeWork 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 WeWork Inc are associated (or correlated) with Redfin Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redfin Corp has no effect on the direction of WeWork i.e., WeWork and Redfin Corp go up and down completely randomly.

Pair Corralation between WeWork and Redfin Corp

If you would invest  794.00  in Redfin Corp on December 28, 2024 and sell it today you would earn a total of  228.00  from holding Redfin Corp or generate 28.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

WeWork Inc  vs.  Redfin Corp

WeWork Inc

Risk-Adjusted Performance

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.

Redfin Corp

Risk-Adjusted Performance

Modest

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

Pair Trading with WeWork and Redfin Corp

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

The idea behind WeWork Inc and Redfin Corp 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.