Correlation Between EXp World and Real Estate

Can any of the company-specific risk be diversified away by investing in both EXp World and Real Estate 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 Real Estate 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 Real Estate Fund, you can compare the effects of market volatilities on EXp World and Real Estate 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 Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of EXp World and Real Estate.

Diversification Opportunities for EXp World and Real Estate

0.66

Correlation Coefficient

EXp World  Real Estate

Poor diversification

The 3 months correlation between EXp and Real is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding eXp World Holdings and Real Estate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Fund 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 Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Fund has no effect on the direction of EXp World i.e., EXp World and Real Estate go up and down completely randomly.

Pair Corralation between EXp World and Real Estate

Given the investment horizon of 90 days eXp World Holdings is expected to under-perform the Real Estate. In addition to that, EXp World is 3.03 times more volatile than Real Estate Fund. It trades about -0.22 of its total potential returns per unit of risk. Real Estate Fund is currently generating about -0.4 per unit of volatility. If you would invest  3,553  in Real Estate Fund on September 29, 2024 and sell it today you would lose (325.00) from holding Real Estate Fund or give up 9.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

eXp World Holdings  vs.  Real Estate Fund

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Real Estate Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Estate Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with EXp World and Real Estate

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

The idea behind eXp World Holdings and Real Estate Fund 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.