Correlation Between Zillow and Stagwell
Can any of the company-specific risk be diversified away by investing in both Zillow and Stagwell 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 Stagwell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zillow Group and Stagwell, you can compare the effects of market volatilities on Zillow and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zillow and Stagwell.
Diversification Opportunities for Zillow and Stagwell
Poor diversification
The 3 months correlation between Zillow and Stagwell is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Zillow i.e., Zillow and Stagwell go up and down completely randomly.
Pair Corralation between Zillow and Stagwell
Allowing for the 90-day total investment horizon Zillow Group is expected to generate 2.21 times more return on investment than Stagwell. However, Zillow is 2.21 times more volatile than Stagwell. It trades about 0.3 of its potential returns per unit of risk. Stagwell is currently generating about 0.4 per unit of risk. If you would invest 5,773 in Zillow Group on August 27, 2024 and sell it today you would earn a total of 2,306 from holding Zillow Group or generate 39.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zillow Group vs. Stagwell
Performance |
| Timeline |
| Zillow Group |
| Stagwell |
Zillow and Stagwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zillow and Stagwell
The main advantage of trading using opposite Zillow and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zillow position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.The idea behind Zillow Group and Stagwell 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.| Stagwell vs. Innovid Corp | Stagwell vs. Interpublic Group of | Stagwell vs. Cimpress NV | Stagwell vs. Criteo Sa |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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