Correlation Between EverQuote and Onfolio Holdings

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

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

Diversification Opportunities for EverQuote and Onfolio Holdings

-0.53

Correlation Coefficient

EverQuote  Onfolio Holdings

Excellent diversification

The 3 months correlation between EverQuote and Onfolio is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding EverQuote Class A and Onfolio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onfolio Holdings and EverQuote 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 EverQuote Class A are associated (or correlated) with Onfolio Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onfolio Holdings has no effect on the direction of EverQuote i.e., EverQuote and Onfolio Holdings go up and down completely randomly.

Pair Corralation between EverQuote and Onfolio Holdings

Given the investment horizon of 90 days EverQuote is expected to generate 1.1 times less return on investment than Onfolio Holdings. But when comparing it to its historical volatility, EverQuote Class A is 2.72 times less risky than Onfolio Holdings. It trades about 0.19 of its potential returns per unit of risk. Onfolio Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  48.00  in Onfolio Holdings on February 1, 2024 and sell it today you would earn a total of  7.00  from holding Onfolio Holdings or generate 14.58% return on investment over 90 days.

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

EverQuote Class A  vs.  Onfolio Holdings

EverQuote Class A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EverQuote Class A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, EverQuote reported solid returns over the last few months and may actually be approaching a breakup point.

Onfolio Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Onfolio Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Onfolio Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EverQuote and Onfolio Holdings

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

The idea behind EverQuote Class A and Onfolio 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.