Correlation Between EXp World and New England

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

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

Diversification Opportunities for EXp World and New England

-0.02

Correlation Coefficient

EXp World  New England

Good diversification

The 3 months correlation between EXp and New is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding eXp World Holdings and New England Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New England Realty and EXp World 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 eXp World Holdings are associated (or correlated) with New England. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New England Realty has no effect on the direction of EXp World i.e., EXp World and New England go up and down completely randomly.

Pair Corralation between EXp World and New England

Given the investment horizon of 90 days EXp World is expected to generate 135.49 times less return on investment than New England. But when comparing it to its historical volatility, eXp World Holdings is 24.45 times less risky than New England. It trades about 0.01 of its potential returns per unit of risk. New England Realty is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,742  in New England Realty on September 4, 2024 and sell it today you would earn a total of  1,505  from holding New England Realty or generate 22.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.87%
Values	Daily Returns

eXp World Holdings  vs.  New England Realty

eXp World Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in eXp World Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, EXp World demonstrated solid returns over the last few months and may actually be approaching a breakup point.

New England Realty

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days New England Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very uncertain technical and fundamental indicators, New England may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EXp World and New England

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

The idea behind eXp World Holdings and New England Realty 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.