Correlation Between CoStar and Greentown Management

Can any of the company-specific risk be diversified away by investing in both CoStar and Greentown Management 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 CoStar and Greentown Management into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CoStar Group and Greentown Management Holdings, you can compare the effects of market volatilities on CoStar and Greentown Management 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 CoStar with a short position of Greentown Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of CoStar and Greentown Management.

Diversification Opportunities for CoStar and Greentown Management

0.84

Correlation Coefficient

CoStar  Greentown Management

Very poor diversification

The 3 months correlation between CoStar and Greentown is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CoStar Group and Greentown Management Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greentown Management and CoStar 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 CoStar Group are associated (or correlated) with Greentown Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greentown Management has no effect on the direction of CoStar i.e., CoStar and Greentown Management go up and down completely randomly.

Pair Corralation between CoStar and Greentown Management

Given the investment horizon of 90 days CoStar Group is expected to generate 2.04 times more return on investment than Greentown Management. However, CoStar is 2.04 times more volatile than Greentown Management Holdings. It trades about 0.16 of its potential returns per unit of risk. Greentown Management Holdings is currently generating about 0.12 per unit of risk. If you would invest  7,691  in CoStar Group on May 19, 2025 and sell it today you would earn a total of  1,275  from holding CoStar Group or generate 16.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.92%
Values	Daily Returns

CoStar Group  vs.  Greentown Management Holdings

CoStar Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CoStar Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, CoStar reported solid returns over the last few months and may actually be approaching a breakup point.

Greentown Management

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Greentown Management Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Greentown Management is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CoStar and Greentown Management

The main advantage of trading using opposite CoStar and Greentown Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CoStar position performs unexpectedly, Greentown Management 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 Greentown Management will offset losses from the drop in Greentown Management's long position.

The idea behind CoStar Group and Greentown Management Holdings 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.