Correlation Between Zillow Group and ZBIO

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

Diversification Opportunities for Zillow Group and ZBIO

0.0

Correlation Coefficient

Zillow Group  ZBIO

Pay attention - limited upside

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

Pair Corralation between Zillow Group and ZBIO

If you would invest  3,646  in Zillow Group Class on January 30, 2024 and sell it today you would earn a total of  721.00  from holding Zillow Group Class or generate 19.78% 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.  ZBIO

Zillow Group Class

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the ETF investors.

ZBIO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZBIO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, ZBIO is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Zillow Group and ZBIO

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

The idea behind Zillow Group Class and ZBIO 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.