Correlation Between Zillow Group and Charter Communications

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

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

Diversification Opportunities for Zillow Group and Charter Communications

-0.15

Correlation Coefficient

Zillow Group  Charter Communications

Good diversification

The 3 months correlation between Zillow and Charter is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group Class and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and Zillow Group 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 Zillow Group Class are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Zillow Group i.e., Zillow Group and Charter Communications go up and down completely randomly.

Pair Corralation between Zillow Group and Charter Communications

Taking into account the 90-day investment horizon Zillow Group Class is expected to under-perform the Charter Communications. In addition to that, Zillow Group is 1.34 times more volatile than Charter Communications. It trades about -0.04 of its total potential returns per unit of risk. Charter Communications is currently generating about 0.09 per unit of volatility. If you would invest  34,865  in Charter Communications on December 27, 2024 and sell it today you would earn a total of  3,337  from holding Charter Communications or generate 9.57% return on investment over 90 days.

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

Zillow Group Class  vs.  Charter Communications

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.

Charter Communications

Risk-Adjusted Performance

OK

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

Pair Trading with Zillow Group and Charter Communications

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

The idea behind Zillow Group Class and Charter Communications 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.