30.83 -0.16 (-0.52%) Sell

Z investors looking to exit as part of sectoral rotation

13 min read

ZILLOW GROUP, INC. ranked among the worst performers on Tuesday. It delivered -0.52% to close at 30.83. On a day when the overall market breadth was 34%, it closed higher than 75% of the market. In comparison, the benchmark SP500 index closed today at +0.01%.

[Themes containing Z]

Buy-and-Hold investors in Z experienced a maximum drawdown of -39.2% over the last three months. It delivered -30.11% during this strong bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.


Z has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 8 Feb, 2016 to 15 Jun, 2018. Over the last 2 years 11 months and 14 days, Z outperformed the SP500 index on 55% days.

Z returned losses on 53% days in the last three months. During this time, it delivered on average -0.44% per day. It delivered it's worst daily return of -26.92%, during this period, on Wednesday, 7 Nov, 2018. The longest stort-term trend during this period was 7 profitable days, which started on 20 Nov, 2018 and went on till 29 Nov, 2018. This bullish trend returned +31.42% to investors.

The last 12 months saw Z's investors making profits in 5 months and incurring losses in 7 months. Z was less consistent in delivering monthly returs than SP500 index. Z significantly outperformed SP500 index in May 2018, when it returned +20.29% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. Z had a longer winning streak of losing months than SP500 index. It went down in 6 straight months (from Jul 2018 to Dec 2018) during which period it delivered -58.94%.

"Once my ears were open to hearing mentions of 'Shark Tank', I was surprised by how many people in our world, even in our industry, tech and finance, loved the show.

Z is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in Z's volatility from 20 Sep, 2018 to 14 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that Z has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

Investors trading in Z derivatives at this moment can consider 'Married Call' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than Z. Therefore, SP500 must receive a lower allocation than Z in your portfolio. SP500 index usually has shorter drawdown period than Z.

Based on your interest in Z you may find it interesting to know that LBIX has delivered similar performance as Z and can be considered as an alternative investment candidate (to Z).

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