Correlation Between Zillow Group and Marchex

Can any of the company-specific risk be diversified away by investing in both Zillow Group and Marchex 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 Marchex 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 Marchex, you can compare the effects of market volatilities on Zillow Group and Marchex 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 Marchex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zillow Group and Marchex.

Diversification Opportunities for Zillow Group and Marchex

0.54

Correlation Coefficient

Zillow Group  Marchex

Very weak diversification

The 3 months correlation between Zillow and Marchex is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group Class and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex 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 Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of Zillow Group i.e., Zillow Group and Marchex go up and down completely randomly.

Pair Corralation between Zillow Group and Marchex

Taking into account the 90-day investment horizon Zillow Group is expected to generate 2.32 times less return on investment than Marchex. But when comparing it to its historical volatility, Zillow Group Class is 2.22 times less risky than Marchex. It trades about 0.17 of its potential returns per unit of risk. Marchex is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  131.00  in Marchex on May 6, 2025 and sell it today you would earn a total of  62.00  from holding Marchex or generate 47.33% return on investment over 90 days.

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

Zillow Group Class  vs.  Marchex

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 13 (%) 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.

Marchex

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, Marchex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zillow Group and Marchex

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

The idea behind Zillow Group Class and Marchex 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.