Correlation Between Gaucho Group and Zillow

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

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

Diversification Opportunities for Gaucho Group and Zillow

-0.03

Correlation Coefficient

Gaucho Group  Zillow

Good diversification

The 3 months correlation between Gaucho and Zillow is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gaucho Group Holdings and Zillow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zillow Group and Gaucho 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 Gaucho Group Holdings 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 Gaucho Group i.e., Gaucho Group and Zillow go up and down completely randomly.

Pair Corralation between Gaucho Group and Zillow

Given the investment horizon of 90 days Gaucho Group Holdings is expected to under-perform the Zillow. In addition to that, Gaucho Group is 4.12 times more volatile than Zillow Group. It trades about -0.01 of its total potential returns per unit of risk. Zillow Group is currently generating about 0.06 per unit of volatility. If you would invest  4,151  in Zillow Group on February 22, 2024 and sell it today you would earn a total of  107.00  from holding Zillow Group or generate 2.58% return on investment over 90 days.

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

Gaucho Group Holdings  vs.  Zillow Group

Gaucho Group Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gaucho Group Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Gaucho Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Zillow Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zillow Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gaucho Group and Zillow

The main advantage of trading using opposite Gaucho Group and Zillow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaucho Group 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 Gaucho Group Holdings 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.