Correlation Between Root and EXp World
Can any of the company-specific risk be diversified away by investing in both Root 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 Root and EXp World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Root Inc and eXp World Holdings, you can compare the effects of market volatilities on Root 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 Root with a short position of EXp World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Root and EXp World.
Diversification Opportunities for Root and EXp World
Modest diversification
The 3 months correlation between Root and EXp is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Root Inc 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 Root 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 Root Inc 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 Root i.e., Root and EXp World go up and down completely randomly.
Pair Corralation between Root and EXp World
Given the investment horizon of 90 days Root Inc is expected to generate 4.26 times more return on investment than EXp World. However, Root is 4.26 times more volatile than eXp World Holdings. It trades about 0.33 of its potential returns per unit of risk. eXp World Holdings is currently generating about 0.15 per unit of risk. If you would invest 4,049 in Root Inc on August 31, 2024 and sell it today you would earn a total of 5,857 from holding Root Inc or generate 144.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Root Inc vs. eXp World Holdings
Performance |
| Timeline |
| Root Inc |
| eXp World Holdings |
Root and EXp World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Root and EXp World
The main advantage of trading using opposite Root and EXp World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Root 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.| Root vs. Selective Insurance Group | Root vs. Donegal Group B | Root vs. Horace Mann Educators | Root vs. Global Indemnity PLC |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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