Correlation Between Zillow Group and SSGA Active

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

Diversification Opportunities for Zillow Group and SSGA Active

0.0

Correlation Coefficient

Zillow Group  SSGA Active

Pay attention - limited upside

The 3 months correlation between Zillow and SSGA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group Class and SSGA Active Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSGA Active Trust 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 SSGA Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSGA Active Trust has no effect on the direction of Zillow Group i.e., Zillow Group and SSGA Active go up and down completely randomly.

Pair Corralation between Zillow Group and SSGA Active

Taking into account the 90-day investment horizon Zillow Group Class is expected to generate 19.43 times more return on investment than SSGA Active. However, Zillow Group is 19.43 times more volatile than SSGA Active Trust. It trades about 0.21 of its potential returns per unit of risk. SSGA Active Trust is currently generating about 0.06 per unit of risk. If you would invest  5,401  in Zillow Group Class on September 2, 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	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Zillow Group Class  vs.  SSGA Active Trust

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.

SSGA Active Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SSGA Active Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SSGA Active is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Zillow Group and SSGA Active

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

The idea behind Zillow Group Class and SSGA Active Trust 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.