Correlation Between Zillow Group and Magnite
Can any of the company-specific risk be diversified away by investing in both Zillow Group and Magnite 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 Magnite 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 Magnite, you can compare the effects of market volatilities on Zillow Group and Magnite 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 Magnite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zillow Group and Magnite.
Diversification Opportunities for Zillow Group and Magnite
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zillow and Magnite is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group Class and Magnite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnite 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 Magnite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnite has no effect on the direction of Zillow Group i.e., Zillow Group and Magnite go up and down completely randomly.
Pair Corralation between Zillow Group and Magnite
Taking into account the 90-day investment horizon Zillow Group Class is expected to generate 1.13 times more return on investment than Magnite. However, Zillow Group is 1.13 times more volatile than Magnite. It trades about 0.16 of its potential returns per unit of risk. Magnite is currently generating about 0.14 per unit of risk. If you would invest 6,548 in Zillow Group Class on August 28, 2024 and sell it today you would earn a total of 1,886 from holding Zillow Group Class or generate 28.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zillow Group Class vs. Magnite
Performance |
| Timeline |
| Zillow Group Class |
| Magnite |
Zillow Group and Magnite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zillow Group and Magnite
The main advantage of trading using opposite Zillow Group and Magnite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zillow Group position performs unexpectedly, Magnite 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 Magnite will offset losses from the drop in Magnite's long position.| Zillow Group vs. Pinterest | Zillow Group vs. Snap Inc | Zillow Group vs. Spotify Technology SA | Zillow Group vs. Twilio Inc |
| Magnite vs. Deluxe | Magnite vs. Clear Channel Outdoor | Magnite vs. Entravision Communications | Magnite vs. Innovid 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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