Correlation Between BZDYF and Zillow Group

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

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

Diversification Opportunities for BZDYF and Zillow Group

-0.59

Correlation Coefficient

BZDYF  Zillow Group

Excellent diversification

The 3 months correlation between BZDYF and Zillow is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding BZDYF and Zillow Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zillow Group Class and BZDYF 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 BZDYF are associated (or correlated) with Zillow Group. 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 Class has no effect on the direction of BZDYF i.e., BZDYF and Zillow Group go up and down completely randomly.

Pair Corralation between BZDYF and Zillow Group

Assuming the 90 days horizon BZDYF is expected to generate 0.3 times more return on investment than Zillow Group. However, BZDYF is 3.28 times less risky than Zillow Group. It trades about -0.2 of its potential returns per unit of risk. Zillow Group Class is currently generating about -0.31 per unit of risk. If you would invest  3,027  in BZDYF on January 20, 2024 and sell it today you would lose (82.00) from holding BZDYF or give up 2.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.91%
Values	Daily Returns

BZDYF  vs.  Zillow Group Class

BZDYF

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BZDYF are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BZDYF is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Zillow Group Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zillow Group Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with BZDYF and Zillow Group

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

The idea behind BZDYF and Zillow Group Class 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 Stocks Directory module to find actively traded stocks across global markets.