Correlation Between EverQuote and Zillow Group

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

Diversification Opportunities for EverQuote and Zillow Group

-0.33

Correlation Coefficient

EverQuote  Zillow Group

Very good diversification

The 3 months correlation between EverQuote and Zillow is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding EverQuote Class A and Zillow Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zillow Group Class 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 Zillow Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zillow Group Class has no effect on the direction of EverQuote i.e., EverQuote and Zillow Group go up and down completely randomly.

Pair Corralation between EverQuote and Zillow Group

Given the investment horizon of 90 days EverQuote Class A is expected to under-perform the Zillow Group. In addition to that, EverQuote is 1.01 times more volatile than Zillow Group Class. It trades about -0.04 of its total potential returns per unit of risk. Zillow Group Class is currently generating about 0.21 per unit of volatility. If you would invest  5,401  in Zillow Group Class on September 1, 2024 and sell it today you would earn a total of  3,070  from holding Zillow Group Class or generate 56.84% return on investment over 90 days.

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

EverQuote Class A  vs.  Zillow Group Class

EverQuote Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EverQuote Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Zillow Group Class

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zillow Group Class are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Zillow Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EverQuote and Zillow Group

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

The idea behind EverQuote Class A and Zillow Group Class 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.