Correlation Between Marcus Millichap and CoStar

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

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

Diversification Opportunities for Marcus Millichap and CoStar

0.25

Correlation Coefficient

Marcus Millichap  CoStar

Modest diversification

The 3 months correlation between Marcus and CoStar is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Marcus Millichap and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group and Marcus Millichap 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 Marcus Millichap are associated (or correlated) with CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of Marcus Millichap i.e., Marcus Millichap and CoStar go up and down completely randomly.

Pair Corralation between Marcus Millichap and CoStar

Considering the 90-day investment horizon Marcus Millichap is expected to generate 0.89 times more return on investment than CoStar. However, Marcus Millichap is 1.13 times less risky than CoStar. It trades about 0.08 of its potential returns per unit of risk. CoStar Group is currently generating about 0.07 per unit of risk. If you would invest  3,840  in Marcus Millichap on September 2, 2024 and sell it today you would earn a total of  321.00  from holding Marcus Millichap or generate 8.36% return on investment over 90 days.

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

Marcus Millichap  vs.  CoStar Group

Marcus Millichap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marcus Millichap are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak primary indicators, Marcus Millichap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CoStar Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CoStar Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, CoStar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Marcus Millichap and CoStar

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

The idea behind Marcus Millichap and CoStar 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.