Correlation Between Zillow and Newmark

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

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

Diversification Opportunities for Zillow and Newmark

0.65

Correlation Coefficient

Zillow  Newmark

Poor diversification

The 3 months correlation between Zillow and Newmark is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group and Newmark Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmark Group and Zillow 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 are associated (or correlated) with Newmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmark Group has no effect on the direction of Zillow i.e., Zillow and Newmark go up and down completely randomly.

Pair Corralation between Zillow and Newmark

Allowing for the 90-day total investment horizon Zillow Group is expected to generate 2.18 times more return on investment than Newmark. However, Zillow is 2.18 times more volatile than Newmark Group. It trades about 0.2 of its potential returns per unit of risk. Newmark Group is currently generating about 0.11 per unit of risk. If you would invest  5,224  in Zillow Group on September 2, 2024 and sell it today you would earn a total of  2,929  from holding Zillow Group or generate 56.07% return on investment over 90 days.

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

Zillow Group  vs.  Newmark Group

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.

Newmark Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newmark Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Newmark may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zillow and Newmark

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

The idea behind Zillow Group and Newmark 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.