Correlation Between Offerpad Solutions and Doma Holdings

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Can any of the company-specific risk be diversified away by investing in both Offerpad Solutions and Doma Holdings 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 Offerpad Solutions and Doma Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Offerpad Solutions and Doma Holdings, you can compare the effects of market volatilities on Offerpad Solutions and Doma Holdings 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 Offerpad Solutions with a short position of Doma Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Offerpad Solutions and Doma Holdings.

Diversification Opportunities for Offerpad Solutions and Doma Holdings

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Offerpad and Doma is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Offerpad Solutions and Doma Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doma Holdings and Offerpad Solutions 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 Offerpad Solutions are associated (or correlated) with Doma Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doma Holdings has no effect on the direction of Offerpad Solutions i.e., Offerpad Solutions and Doma Holdings go up and down completely randomly.

Pair Corralation between Offerpad Solutions and Doma Holdings

If you would invest  300.00  in Offerpad Solutions on August 31, 2024 and sell it today you would earn a total of  177.00  from holding Offerpad Solutions or generate 59.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy4.55%
ValuesDaily Returns

Offerpad Solutions  vs.  Doma Holdings

 Performance 
       Timeline  
Offerpad Solutions 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Offerpad Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Offerpad Solutions exhibited solid returns over the last few months and may actually be approaching a breakup point.
Doma Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Solid
Over the last 90 days Doma Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat uncertain primary indicators, Doma Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Offerpad Solutions and Doma Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Offerpad Solutions and Doma Holdings

The main advantage of trading using opposite Offerpad Solutions and Doma Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Offerpad Solutions position performs unexpectedly, Doma Holdings 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 Doma Holdings will offset losses from the drop in Doma Holdings' long position.
The idea behind Offerpad Solutions and Doma 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.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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