Correlation Between American Well and EXp World

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

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

Diversification Opportunities for American Well and EXp World

0.01

Correlation Coefficient

American Well  EXp World

Significant diversification

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

Pair Corralation between American Well and EXp World

Given the investment horizon of 90 days American Well Corp is expected to generate 1.44 times more return on investment than EXp World. However, American Well is 1.44 times more volatile than eXp World Holdings. It trades about 0.02 of its potential returns per unit of risk. eXp World Holdings is currently generating about -0.05 per unit of risk. If you would invest  934.00  in American Well Corp on September 13, 2024 and sell it today you would earn a total of  10.00  from holding American Well Corp or generate 1.07% return on investment over 90 days.

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

American Well Corp  vs.  eXp World Holdings

American Well Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Well Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, American Well is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

eXp World Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eXp World Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with American Well and EXp World

The main advantage of trading using opposite American Well and EXp World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Well 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 American Well Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.