Correlation Between Redfin Corp and Re Max
Can any of the company-specific risk be diversified away by investing in both Redfin Corp and Re Max 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 Redfin Corp and Re Max into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redfin Corp and Re Max Holding, you can compare the effects of market volatilities on Redfin Corp and Re Max 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 Redfin Corp with a short position of Re Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redfin Corp and Re Max.
Diversification Opportunities for Redfin Corp and Re Max
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Redfin and RMAX is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Redfin Corp and Re Max Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Re Max Holding and Redfin Corp 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 Redfin Corp are associated (or correlated) with Re Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Re Max Holding has no effect on the direction of Redfin Corp i.e., Redfin Corp and Re Max go up and down completely randomly.
Pair Corralation between Redfin Corp and Re Max
Given the investment horizon of 90 days Redfin Corp is expected to under-perform the Re Max. In addition to that, Redfin Corp is 1.24 times more volatile than Re Max Holding. It trades about -0.02 of its total potential returns per unit of risk. Re Max Holding is currently generating about 0.11 per unit of volatility. If you would invest 1,234 in Re Max Holding on August 28, 2024 and sell it today you would earn a total of 114.00 from holding Re Max Holding or generate 9.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redfin Corp vs. Re Max Holding
Performance |
| Timeline |
| Redfin Corp |
| Re Max Holding |
Redfin Corp and Re Max Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redfin Corp and Re Max
The main advantage of trading using opposite Redfin Corp and Re Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redfin Corp position performs unexpectedly, Re Max 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 Re Max will offset losses from the drop in Re Max's long position.| Redfin Corp vs. Offerpad Solutions | Redfin Corp vs. eXp World Holdings | Redfin Corp vs. Ohmyhome Limited Ordinary | Redfin Corp vs. Real Brokerage |
| Re Max vs. Marcus Millichap | Re Max vs. Frp Holdings Ord | Re Max vs. Maui Land Pineapple | Re Max vs. Transcontinental Realty Investors |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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