Correlation Between RMR and EXp World
Can any of the company-specific risk be diversified away by investing in both RMR 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 RMR and EXp World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RMR Group and eXp World Holdings, you can compare the effects of market volatilities on RMR 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 RMR with a short position of EXp World. Check out your portfolio center. Please also check ongoing floating volatility patterns of RMR and EXp World.
Diversification Opportunities for RMR and EXp World
Significant diversification
The 3 months correlation between RMR and EXp is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding RMR Group 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 RMR 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 RMR Group 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 RMR i.e., RMR and EXp World go up and down completely randomly.
Pair Corralation between RMR and EXp World
Considering the 90-day investment horizon RMR Group is expected to under-perform the EXp World. But the stock apears to be less risky and, when comparing its historical volatility, RMR Group is 1.88 times less risky than EXp World. The stock trades about -0.23 of its potential returns per unit of risk. The eXp World Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,292 in eXp World Holdings on August 27, 2024 and sell it today you would earn a total of 147.00 from holding eXp World Holdings or generate 11.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RMR Group vs. eXp World Holdings
Performance |
| Timeline |
| RMR Group |
| eXp World Holdings |
RMR and EXp World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RMR and EXp World
The main advantage of trading using opposite RMR and EXp World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RMR 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.| RMR vs. Investcorp Credit Management | RMR vs. Medalist Diversified Reit | RMR vs. Aquagold International | RMR vs. Morningstar Unconstrained Allocation |
| EXp World vs. Re Max Holding | EXp World vs. Fathom Holdings | 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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