Correlation Between CoStar and Marcus Millichap

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

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

Diversification Opportunities for CoStar and Marcus Millichap

0.71

Correlation Coefficient

CoStar  Marcus Millichap

Poor diversification

The 3 months correlation between CoStar and Marcus is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CoStar Group and Marcus Millichap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcus Millichap 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 Marcus Millichap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcus Millichap has no effect on the direction of CoStar i.e., CoStar and Marcus Millichap go up and down completely randomly.

Pair Corralation between CoStar and Marcus Millichap

Given the investment horizon of 90 days CoStar Group is expected to generate 0.86 times more return on investment than Marcus Millichap. However, CoStar Group is 1.17 times less risky than Marcus Millichap. It trades about 0.25 of its potential returns per unit of risk. Marcus Millichap is currently generating about 0.04 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	Significant
Accuracy	98.39%
Values	Daily Returns

CoStar Group  vs.  Marcus Millichap

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.

Marcus Millichap

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marcus Millichap are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, Marcus Millichap is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with CoStar and Marcus Millichap

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

The idea behind CoStar Group and Marcus Millichap 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.