Correlation Between Phoenix New and Zillow
Can any of the company-specific risk be diversified away by investing in both Phoenix New and Zillow 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 Phoenix New and Zillow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phoenix New Media and Zillow Group, you can compare the effects of market volatilities on Phoenix New and Zillow 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 Phoenix New with a short position of Zillow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix New and Zillow.
Diversification Opportunities for Phoenix New and Zillow
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Phoenix and Zillow is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix New Media and Zillow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zillow Group and Phoenix New 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 Phoenix New Media are associated (or correlated) with Zillow. 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 has no effect on the direction of Phoenix New i.e., Phoenix New and Zillow go up and down completely randomly.
Pair Corralation between Phoenix New and Zillow
Given the investment horizon of 90 days Phoenix New is expected to generate 1.35 times less return on investment than Zillow. In addition to that, Phoenix New is 1.97 times more volatile than Zillow Group. It trades about 0.06 of its total potential returns per unit of risk. Zillow Group is currently generating about 0.16 per unit of volatility. If you would invest 3,916 in Zillow Group on August 23, 2024 and sell it today you would earn a total of 4,011 from holding Zillow Group or generate 102.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phoenix New Media vs. Zillow Group
Performance |
| Timeline |
| Phoenix New Media |
| Zillow Group |
Phoenix New and Zillow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phoenix New and Zillow
The main advantage of trading using opposite Phoenix New and Zillow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phoenix New position performs unexpectedly, Zillow 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 will offset losses from the drop in Zillow's long position.| Phoenix New vs. Baidu Inc | Phoenix New vs. Twilio Inc | Phoenix New vs. Spotify Technology SA | Phoenix New vs. Weibo Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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