Correlation Between Zillow Group and Nuveen NASDAQ

Can any of the company-specific risk be diversified away by investing in both Zillow Group and Nuveen NASDAQ 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 Nuveen NASDAQ 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 Nuveen NASDAQ 100, you can compare the effects of market volatilities on Zillow Group and Nuveen NASDAQ 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 Nuveen NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zillow Group and Nuveen NASDAQ.

Diversification Opportunities for Zillow Group and Nuveen NASDAQ

0.82

Correlation Coefficient

Zillow Group  Nuveen NASDAQ

Very poor diversification

The 3 months correlation between Zillow and Nuveen is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group Class and Nuveen NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen NASDAQ 100 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 Nuveen NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen NASDAQ 100 has no effect on the direction of Zillow Group i.e., Zillow Group and Nuveen NASDAQ go up and down completely randomly.

Pair Corralation between Zillow Group and Nuveen NASDAQ

Taking into account the 90-day investment horizon Zillow Group Class is expected to under-perform the Nuveen NASDAQ. In addition to that, Zillow Group is 2.34 times more volatile than Nuveen NASDAQ 100. It trades about -0.2 of its total potential returns per unit of risk. Nuveen NASDAQ 100 is currently generating about 0.25 per unit of volatility. If you would invest  2,535  in Nuveen NASDAQ 100 on September 23, 2024 and sell it today you would earn a total of  106.00  from holding Nuveen NASDAQ 100 or generate 4.18% return on investment over 90 days.

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

Zillow Group Class  vs.  Nuveen NASDAQ 100

Zillow Group Class

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zillow Group Class are ranked lower than 6 (%) 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.

Nuveen NASDAQ 100

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen NASDAQ 100 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Nuveen NASDAQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zillow Group and Nuveen NASDAQ

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

The idea behind Zillow Group Class and Nuveen NASDAQ 100 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.