Correlation Between Opendoor Technologies and Doma Holdings

Can any of the company-specific risk be diversified away by investing in both Opendoor Technologies 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 Opendoor Technologies and Doma Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Opendoor Technologies and Doma Holdings, you can compare the effects of market volatilities on Opendoor Technologies 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 Opendoor Technologies with a short position of Doma Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opendoor Technologies and Doma Holdings.

Diversification Opportunities for Opendoor Technologies and Doma Holdings

-0.74

Correlation Coefficient

Opendoor Technologies  Doma Holdings

Pay attention - limited upside

The 3 months correlation between Opendoor and Doma is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Opendoor Technologies and Doma Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doma Holdings and Opendoor Technologies 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 Opendoor Technologies 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 Opendoor Technologies i.e., Opendoor Technologies and Doma Holdings go up and down completely randomly.

Pair Corralation between Opendoor Technologies and Doma Holdings

Given the investment horizon of 90 days Opendoor Technologies is expected to under-perform the Doma Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Opendoor Technologies is 1.29 times less risky than Doma Holdings. The stock trades about -0.03 of its potential returns per unit of risk. The Doma Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  409.00  in Doma Holdings on February 20, 2024 and sell it today you would earn a total of  193.00  from holding Doma Holdings or generate 47.19% return on investment over 90 days.

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

Opendoor Technologies  vs.  Doma Holdings

Opendoor Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Opendoor Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Doma Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Doma Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, Doma Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Opendoor Technologies and Doma Holdings

The main advantage of trading using opposite Opendoor Technologies and Doma Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opendoor Technologies 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 Opendoor Technologies 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.