Correlation Between CoStar and J W

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

By analyzing existing cross correlation between CoStar Group and J W Mays, you can compare the effects of market volatilities on CoStar and J W 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 J W. Check out your portfolio center. Please also check ongoing floating volatility patterns of CoStar and J W.

Diversification Opportunities for CoStar and J W

0.18

Correlation Coefficient

CoStar  J W

Average diversification

The 3 months correlation between CoStar and MAYS is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CoStar Group and J W Mays in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J W Mays 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 J W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J W Mays has no effect on the direction of CoStar i.e., CoStar and J W go up and down completely randomly.

Pair Corralation between CoStar and J W

Given the investment horizon of 90 days CoStar Group is expected to generate 0.67 times more return on investment than J W. However, CoStar Group is 1.49 times less risky than J W. It trades about 0.25 of its potential returns per unit of risk. J W Mays is currently generating about 0.09 per unit of risk. If you would invest  7,417  in CoStar Group on April 30, 2025 and sell it today you would earn a total of  1,919  from holding CoStar Group or generate 25.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	46.77%
Values	Daily Returns

CoStar Group  vs.  J W Mays

CoStar Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CoStar Group are ranked lower than 19 (%) 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.

J W Mays

Risk-Adjusted Performance

OK

Over the last 90 days J W Mays has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively inconsistent basic indicators, J W unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CoStar and J W

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

The idea behind CoStar Group and J W Mays 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.