Correlation Between EXp World and DGA Absolute

Can any of the company-specific risk be diversified away by investing in both EXp World and DGA Absolute 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 DGA Absolute 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 DGA Absolute Return, you can compare the effects of market volatilities on EXp World and DGA Absolute 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 DGA Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of EXp World and DGA Absolute.

Diversification Opportunities for EXp World and DGA Absolute

-0.47

Correlation Coefficient

EXp World  DGA Absolute

Very good diversification

The 3 months correlation between EXp and DGA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding eXp World Holdings and DGA Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGA Absolute Return 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 DGA Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGA Absolute Return has no effect on the direction of EXp World i.e., EXp World and DGA Absolute go up and down completely randomly.

Pair Corralation between EXp World and DGA Absolute

Given the investment horizon of 90 days eXp World Holdings is expected to generate 9.26 times more return on investment than DGA Absolute. However, EXp World is 9.26 times more volatile than DGA Absolute Return. It trades about 0.08 of its potential returns per unit of risk. DGA Absolute Return is currently generating about -0.02 per unit of risk. If you would invest  1,066  in eXp World Holdings on February 4, 2024 and sell it today you would earn a total of  59.00  from holding eXp World Holdings or generate 5.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

eXp World Holdings  vs.  DGA Absolute Return

eXp World Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eXp World Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, EXp World is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

DGA Absolute Return

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DGA Absolute Return are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, DGA Absolute is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with EXp World and DGA Absolute

The main advantage of trading using opposite EXp World and DGA Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EXp World position performs unexpectedly, DGA Absolute 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 DGA Absolute will offset losses from the drop in DGA Absolute's long position.

The idea behind eXp World Holdings and DGA Absolute Return 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 CEOs Directory module to screen CEOs from public companies around the world.