Correlation Between ContextlogicInc and Opendoor Technologies

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

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

Diversification Opportunities for ContextlogicInc and Opendoor Technologies

0.68

Correlation Coefficient

ContextlogicInc  Opendoor Technologies

Poor diversification

The 3 months correlation between ContextlogicInc and Opendoor is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ContextlogicInc and Opendoor Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opendoor Technologies and ContextlogicInc 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 ContextlogicInc are associated (or correlated) with Opendoor Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opendoor Technologies has no effect on the direction of ContextlogicInc i.e., ContextlogicInc and Opendoor Technologies go up and down completely randomly.

Pair Corralation between ContextlogicInc and Opendoor Technologies

Given the investment horizon of 90 days ContextlogicInc is expected to under-perform the Opendoor Technologies. But the stock apears to be less risky and, when comparing its historical volatility, ContextlogicInc is 1.41 times less risky than Opendoor Technologies. The stock trades about -0.03 of its potential returns per unit of risk. The Opendoor Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Opendoor Technologies on March 2, 2024 and sell it today you would earn a total of  11.00  from holding Opendoor Technologies or generate 5.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	61.9%
Values	Daily Returns

ContextlogicInc  vs.  Opendoor Technologies

ContextlogicInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ContextlogicInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ContextlogicInc and Opendoor Technologies

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

The idea behind ContextlogicInc and Opendoor Technologies 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.