Correlation Between Zillow and Zillow Group

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

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

Diversification Opportunities for Zillow and Zillow Group

0.99

Correlation Coefficient

Zillow  Zillow Group

No risk reduction

The 3 months correlation between Zillow and Zillow is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group 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 Zillow 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 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 Zillow i.e., Zillow and Zillow Group go up and down completely randomly.

Pair Corralation between Zillow and Zillow Group

Allowing for the 90-day total investment horizon Zillow Group is expected to generate 1.06 times more return on investment than Zillow Group. However, Zillow is 1.06 times more volatile than Zillow Group Class. It trades about -0.02 of its potential returns per unit of risk. Zillow Group Class is currently generating about -0.04 per unit of risk. If you would invest  7,338  in Zillow Group on December 23, 2024 and sell it today you would lose (360.00) from holding Zillow Group or give up 4.91% of portfolio value over 90 days.

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

Zillow Group  vs.  Zillow Group Class

Zillow Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zillow Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Zillow is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Zillow and Zillow Group

The main advantage of trading using opposite Zillow and Zillow Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zillow 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 Zillow Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.