Correlation Between Zillow and Marchex
Can any of the company-specific risk be diversified away by investing in both Zillow and Marchex 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 and Marchex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zillow Group and Marchex, you can compare the effects of market volatilities on Zillow and Marchex 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 with a short position of Marchex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zillow and Marchex.
Diversification Opportunities for Zillow and Marchex
Very good diversification
The 3 months correlation between Zillow and Marchex is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex and Zillow 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 are associated (or correlated) with Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of Zillow i.e., Zillow and Marchex go up and down completely randomly.
Pair Corralation between Zillow and Marchex
Allowing for the 90-day total investment horizon Zillow Group is expected to generate 1.51 times more return on investment than Marchex. However, Zillow is 1.51 times more volatile than Marchex. It trades about 0.28 of its potential returns per unit of risk. Marchex is currently generating about -0.01 per unit of risk. If you would invest 5,754 in Zillow Group on August 24, 2024 and sell it today you would earn a total of 2,172 from holding Zillow Group or generate 37.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zillow Group vs. Marchex
Performance |
| Timeline |
| Zillow Group |
| Marchex |
Zillow and Marchex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zillow and Marchex
The main advantage of trading using opposite Zillow and Marchex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zillow position performs unexpectedly, Marchex 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 Marchex will offset losses from the drop in Marchex's long position.The idea behind Zillow Group and Marchex 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.| Marchex vs. Entravision Communications | Marchex vs. Direct Digital Holdings | Marchex vs. Cimpress NV | Marchex vs. Townsquare Media |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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