Correlation Between CoStar and Anywhere Real

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

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

Diversification Opportunities for CoStar and Anywhere Real

0.58

Correlation Coefficient

CoStar  Anywhere Real

Very weak diversification

The 3 months correlation between CoStar and Anywhere is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CoStar Group and Anywhere Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anywhere Real Estate and CoStar 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 CoStar Group are associated (or correlated) with Anywhere Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anywhere Real Estate has no effect on the direction of CoStar i.e., CoStar and Anywhere Real go up and down completely randomly.

Pair Corralation between CoStar and Anywhere Real

Given the investment horizon of 90 days CoStar is expected to generate 1.18 times less return on investment than Anywhere Real. But when comparing it to its historical volatility, CoStar Group is 2.21 times less risky than Anywhere Real. It trades about 0.1 of its potential returns per unit of risk. Anywhere Real Estate is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  336.00  in Anywhere Real Estate on December 29, 2024 and sell it today you would earn a total of  28.00  from holding Anywhere Real Estate or generate 8.33% return on investment over 90 days.

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

CoStar Group  vs.  Anywhere Real Estate

CoStar Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CoStar Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, CoStar may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Anywhere Real Estate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Anywhere Real Estate are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Anywhere Real unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CoStar and Anywhere Real

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

The idea behind CoStar Group and Anywhere Real Estate 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.