Correlation Between Tencent Holdings and Zillow Group
Can any of the company-specific risk be diversified away by investing in both Tencent Holdings 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 Tencent Holdings and Zillow Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tencent Holdings Ltd and Zillow Group Class, you can compare the effects of market volatilities on Tencent Holdings 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 Tencent Holdings with a short position of Zillow Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Holdings and Zillow Group.
Diversification Opportunities for Tencent Holdings and Zillow Group
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tencent and Zillow is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Holdings Ltd 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 Tencent Holdings 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 Tencent Holdings Ltd 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 Tencent Holdings i.e., Tencent Holdings and Zillow Group go up and down completely randomly.
Pair Corralation between Tencent Holdings and Zillow Group
Assuming the 90 days horizon Tencent Holdings Ltd is expected to under-perform the Zillow Group. In addition to that, Tencent Holdings is 1.1 times more volatile than Zillow Group Class. It trades about -0.16 of its total potential returns per unit of risk. Zillow Group Class is currently generating about 0.12 per unit of volatility. If you would invest 7,469 in Zillow Group Class on October 20, 2024 and sell it today you would earn a total of 317.00 from holding Zillow Group Class or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Holdings Ltd vs. Zillow Group Class
Performance |
| Timeline |
| Tencent Holdings |
| Zillow Group Class |
Tencent Holdings and Zillow Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Holdings and Zillow Group
The main advantage of trading using opposite Tencent Holdings and Zillow Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Holdings 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.| Tencent Holdings vs. Twilio Inc | Tencent Holdings vs. Snap Inc | Tencent Holdings vs. Alphabet Inc Class A | Tencent Holdings vs. Pinterest |
| Zillow Group vs. Pinterest | Zillow Group vs. Snap Inc | Zillow Group vs. Spotify Technology SA | Zillow Group vs. Twilio Inc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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