Correlation Between ZEGA Buy and Zillow Group

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

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

Diversification Opportunities for ZEGA Buy and Zillow Group

0.72

Correlation Coefficient

ZEGA Buy  Zillow Group

Poor diversification

The 3 months correlation between ZEGA and Zillow is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ZEGA Buy and 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 ZEGA Buy 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 ZEGA Buy and 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 ZEGA Buy i.e., ZEGA Buy and Zillow Group go up and down completely randomly.

Pair Corralation between ZEGA Buy and Zillow Group

Given the investment horizon of 90 days ZEGA Buy and is expected to generate 0.31 times more return on investment than Zillow Group. However, ZEGA Buy and is 3.19 times less risky than Zillow Group. It trades about -0.1 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  2,037  in ZEGA Buy and on December 19, 2024 and sell it today you would lose (96.00) from holding ZEGA Buy and or give up 4.71% of portfolio value over 90 days.

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

ZEGA Buy and  vs.  Zillow Group Class

ZEGA Buy

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZEGA Buy and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, ZEGA Buy is not utilizing all of its potentials. The latest 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 ZEGA Buy and Zillow Group

The main advantage of trading using opposite ZEGA Buy and Zillow Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZEGA Buy 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 ZEGA Buy and 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 Global Correlations module to find global opportunities by holding instruments from different markets.