Correlation Between Douglas Elliman and Zillow

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

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

Diversification Opportunities for Douglas Elliman and Zillow

0.63

Correlation Coefficient

Douglas Elliman  Zillow

Poor diversification

The 3 months correlation between Douglas and Zillow is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Elliman and Zillow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zillow Group and Douglas Elliman 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 Douglas Elliman are associated (or correlated) with Zillow. 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 has no effect on the direction of Douglas Elliman i.e., Douglas Elliman and Zillow go up and down completely randomly.

Pair Corralation between Douglas Elliman and Zillow

Given the investment horizon of 90 days Douglas Elliman is expected to generate 1.29 times less return on investment than Zillow. In addition to that, Douglas Elliman is 1.31 times more volatile than Zillow Group. It trades about 0.12 of its total potential returns per unit of risk. Zillow Group is currently generating about 0.19 per unit of volatility. If you would invest  5,343  in Zillow Group on August 30, 2024 and sell it today you would earn a total of  2,890  from holding Zillow Group or generate 54.09% return on investment over 90 days.

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

Douglas Elliman  vs.  Zillow Group

Douglas Elliman

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Douglas Elliman are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Douglas Elliman reported solid returns over the last few months and may actually be approaching a breakup point.

Zillow Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zillow Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Zillow reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Douglas Elliman and Zillow

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

The idea behind Douglas Elliman and Zillow Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.