Correlation Between Outbrain and Zillow Group

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

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

Diversification Opportunities for Outbrain and Zillow Group

0.5

Correlation Coefficient

Outbrain  Zillow Group

Very weak diversification

The 3 months correlation between Outbrain and Zillow is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Outbrain 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 Outbrain 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 Outbrain 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 Outbrain i.e., Outbrain and Zillow Group go up and down completely randomly.

Pair Corralation between Outbrain and Zillow Group

Allowing for the 90-day total investment horizon Outbrain is expected to under-perform the Zillow Group. In addition to that, Outbrain is 1.53 times more volatile than Zillow Group Class. It trades about -0.26 of its total potential returns per unit of risk. Zillow Group Class is currently generating about -0.04 per unit of volatility. If you would invest  7,669  in Zillow Group Class on December 22, 2024 and sell it today you would lose (544.00) from holding Zillow Group Class or give up 7.09% of portfolio value over 90 days.

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

Outbrain  vs.  Zillow Group Class

Outbrain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Outbrain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Zillow Group Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zillow Group Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Zillow Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Outbrain and Zillow Group

The main advantage of trading using opposite Outbrain and Zillow Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outbrain 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 Outbrain 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.