Correlation Between ANGI Homeservices and AirbnbInc

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

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

Diversification Opportunities for ANGI Homeservices and AirbnbInc

0.21

Correlation Coefficient

ANGI Homeservices  AirbnbInc

Modest diversification

The 3 months correlation between ANGI and AirbnbInc is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ANGI Homeservices and AirbnbInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AirbnbInc and ANGI Homeservices 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 ANGI Homeservices are associated (or correlated) with AirbnbInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AirbnbInc has no effect on the direction of ANGI Homeservices i.e., ANGI Homeservices and AirbnbInc go up and down completely randomly.

Pair Corralation between ANGI Homeservices and AirbnbInc

Given the investment horizon of 90 days ANGI Homeservices is expected to generate 12.6 times less return on investment than AirbnbInc. In addition to that, ANGI Homeservices is 1.77 times more volatile than AirbnbInc. It trades about 0.0 of its total potential returns per unit of risk. AirbnbInc is currently generating about 0.05 per unit of volatility. If you would invest  12,328  in AirbnbInc on January 24, 2024 and sell it today you would earn a total of  3,333  from holding AirbnbInc or generate 27.04% return on investment over 90 days.

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

ANGI Homeservices  vs.  AirbnbInc

ANGI Homeservices

Risk-Adjusted Performance

0 of 100

Very Weak

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

AirbnbInc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AirbnbInc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AirbnbInc may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with ANGI Homeservices and AirbnbInc

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

The idea behind ANGI Homeservices and AirbnbInc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.