Correlation Between State Street and Zillow Group

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

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

Diversification Opportunities for State Street and Zillow Group

0.0

Correlation Coefficient

State Street  Zillow Group

Pay attention - limited upside

The 3 months correlation between State and Zillow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding State Street 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 State Street 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 State Street 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 State Street i.e., State Street and Zillow Group go up and down completely randomly.

Pair Corralation between State Street and Zillow Group

If you would invest (100.00) in State Street on October 8, 2024 and sell it today you would earn a total of  100.00  from holding State Street or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

State Street  vs.  Zillow Group Class

State Street

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Street has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, State Street is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Zillow Group Class

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zillow Group Class are ranked lower than 7 (%) 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 State Street and Zillow Group

The main advantage of trading using opposite State Street and Zillow Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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 State Street 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.