Correlation Between Verizon Communications and EXp World
Can any of the company-specific risk be diversified away by investing in both Verizon Communications 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 Verizon Communications and EXp World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and eXp World Holdings, you can compare the effects of market volatilities on Verizon Communications 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 Verizon Communications with a short position of EXp World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and EXp World.
Diversification Opportunities for Verizon Communications and EXp World
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Verizon and EXp is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications 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 Verizon Communications 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 Verizon Communications 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 Verizon Communications i.e., Verizon Communications and EXp World go up and down completely randomly.
Pair Corralation between Verizon Communications and EXp World
Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 1.37 times less return on investment than EXp World. But when comparing it to its historical volatility, Verizon Communications is 2.81 times less risky than EXp World. It trades about 0.03 of its potential returns per unit of risk. eXp World Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,059 in eXp World Holdings on January 19, 2024 and sell it today you would lose (59.00) from holding eXp World Holdings or give up 5.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. eXp World Holdings
Performance |
| Timeline |
| Verizon Communications |
| eXp World Holdings |
Verizon Communications and EXp World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and EXp World
The main advantage of trading using opposite Verizon Communications and EXp World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications 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 Verizon Communications 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.| EXp World vs. Re Max Holding | EXp World vs. Fathom HoldingsInc | EXp World vs. Anywhere Real Estate | EXp World vs. RMR Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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