Correlation Between Zillow Group and United States

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

Diversification Opportunities for Zillow Group and United States

-0.12

Correlation Coefficient

Zillow Group  United States

Good diversification

The 3 months correlation between Zillow and United is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group Class and United States Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Copper 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Copper has no effect on the direction of Zillow Group i.e., Zillow Group and United States go up and down completely randomly.

Pair Corralation between Zillow Group and United States

Taking into account the 90-day investment horizon Zillow Group Class is expected to under-perform the United States. In addition to that, Zillow Group is 1.69 times more volatile than United States Copper. It trades about -0.04 of its total potential returns per unit of risk. United States Copper is currently generating about 0.24 per unit of volatility. If you would invest  2,552  in United States Copper on December 19, 2024 and sell it today you would earn a total of  580.00  from holding United States Copper or generate 22.73% 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.  United States Copper

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.

United States Copper

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United States Copper are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, United States reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zillow Group and United States

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

The idea behind Zillow Group Class and United States Copper 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.