Correlation Between EXp World and Newmark
Can any of the company-specific risk be diversified away by investing in both EXp World and Newmark 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 Newmark 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 Newmark Group, you can compare the effects of market volatilities on EXp World and Newmark 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 Newmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of EXp World and Newmark.
Diversification Opportunities for EXp World and Newmark
Poor diversification
The 3 months correlation between EXp and Newmark is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding eXp World Holdings and Newmark Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmark Group 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 Newmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmark Group has no effect on the direction of EXp World i.e., EXp World and Newmark go up and down completely randomly.
Pair Corralation between EXp World and Newmark
Given the investment horizon of 90 days EXp World is expected to generate 1.46 times less return on investment than Newmark. In addition to that, EXp World is 1.57 times more volatile than Newmark Group. It trades about 0.08 of its total potential returns per unit of risk. Newmark Group is currently generating about 0.18 per unit of volatility. If you would invest 1,006 in Newmark Group on September 1, 2024 and sell it today you would earn a total of 542.00 from holding Newmark Group or generate 53.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
eXp World Holdings vs. Newmark Group
Performance |
| Timeline |
| eXp World Holdings |
| Newmark Group |
EXp World and Newmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EXp World and Newmark
The main advantage of trading using opposite EXp World and Newmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EXp World position performs unexpectedly, Newmark 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 Newmark will offset losses from the drop in Newmark's long position.| EXp World vs. Re Max Holding | EXp World vs. Fathom Holdings | EXp World vs. Anywhere Real Estate | EXp World vs. RMR Group |
| Newmark vs. Jones Lang LaSalle | Newmark vs. CBRE Group Class | Newmark vs. Colliers International Group | Newmark vs. Marcus Millichap |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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