Correlation Between Zillow Group and State Street

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

Diversification Opportunities for Zillow Group and State Street

0.0

Correlation Coefficient

Zillow Group  State Street

Pay attention - limited upside

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

Pair Corralation between Zillow Group and State Street

If you would invest  4,790  in Zillow Group Class on October 8, 2024 and sell it today you would earn a total of  2,756  from holding Zillow Group Class or generate 57.54% return on investment over 90 days.

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

Zillow Group Class  vs.  State Street

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.

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. In spite of rather sound primary indicators, State Street is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Zillow Group and State Street

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

The idea behind Zillow Group Class and State Street 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.