Correlation Between Strategy Shares and Zillow Group

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

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

Diversification Opportunities for Strategy Shares and Zillow Group

0.81

Correlation Coefficient

Strategy Shares  Zillow Group

Very poor diversification

The 3 months correlation between Strategy and Zillow is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares and Zillow Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zillow Group Class and Strategy Shares 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 Strategy Shares are associated (or correlated) with Zillow Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zillow Group Class has no effect on the direction of Strategy Shares i.e., Strategy Shares and Zillow Group go up and down completely randomly.

Pair Corralation between Strategy Shares and Zillow Group

Given the investment horizon of 90 days Strategy Shares is expected to generate 4.72 times less return on investment than Zillow Group. But when comparing it to its historical volatility, Strategy Shares is 4.1 times less risky than Zillow Group. It trades about 0.14 of its potential returns per unit of risk. Zillow Group Class is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  6,813  in Zillow Group Class on May 4, 2025 and sell it today you would earn a total of  1,207  from holding Zillow Group Class or generate 17.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Strategy Shares  vs.  Zillow Group Class

Strategy Shares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strategy Shares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Strategy Shares is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zillow Group Class

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zillow Group Class are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Zillow Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strategy Shares and Zillow Group

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

The idea behind Strategy Shares and Zillow Group Class 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.