Correlation Between Zillow Group and Phoenix New

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

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

Diversification Opportunities for Zillow Group and Phoenix New

-0.4

Correlation Coefficient

Zillow Group  Phoenix New

Very good diversification

The 3 months correlation between Zillow and Phoenix is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group Class and Phoenix New Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix New Media and Zillow Group 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 Class are associated (or correlated) with Phoenix New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix New Media has no effect on the direction of Zillow Group i.e., Zillow Group and Phoenix New go up and down completely randomly.

Pair Corralation between Zillow Group and Phoenix New

Taking into account the 90-day investment horizon Zillow Group Class is expected to generate 0.75 times more return on investment than Phoenix New. However, Zillow Group Class is 1.33 times less risky than Phoenix New. It trades about 0.17 of its potential returns per unit of risk. Phoenix New Media is currently generating about -0.07 per unit of risk. If you would invest  5,753  in Zillow Group Class on August 25, 2024 and sell it today you would earn a total of  2,624  from holding Zillow Group Class or generate 45.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Zillow Group Class  vs.  Phoenix New Media

Zillow Group Class

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zillow Group Class are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Zillow Group showed solid returns over the last few months and may actually be approaching a breakup point.

Phoenix New Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phoenix New Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Zillow Group and Phoenix New

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

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