Correlation Between Exxon and Zillow Group

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Can any of the company-specific risk be diversified away by investing in both Exxon 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 Exxon and Zillow Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil Corp and Zillow Group Class, you can compare the effects of market volatilities on Exxon 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 Exxon with a short position of Zillow Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Zillow Group.

Diversification Opportunities for Exxon and Zillow Group

-0.81
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Exxon and Zillow is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp 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 Exxon 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 Exxon Mobil Corp 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 Exxon i.e., Exxon and Zillow Group go up and down completely randomly.

Pair Corralation between Exxon and Zillow Group

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.36 times more return on investment than Zillow Group. However, Exxon Mobil Corp is 2.78 times less risky than Zillow Group. It trades about 0.28 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  11,299  in Exxon Mobil Corp on January 20, 2024 and sell it today you would earn a total of  553.00  from holding Exxon Mobil Corp or generate 4.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Exxon Mobil Corp  vs.  Zillow Group Class

 Performance 
       Timeline  
Exxon Mobil Corp 

Risk-Adjusted Performance

26 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Exxon displayed solid returns over the last few months and may actually be approaching a breakup point.
Zillow Group Class 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Exxon and Zillow Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Exxon and Zillow Group

The main advantage of trading using opposite Exxon and Zillow Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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 Exxon Mobil Corp 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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