Correlation Between ANZ Group and Mercury NZ

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

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

Diversification Opportunities for ANZ Group and Mercury NZ

0.57

Correlation Coefficient

ANZ Group  Mercury NZ

Very weak diversification

The 3 months correlation between ANZ and Mercury is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ANZ Group Holdings and Mercury NZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury NZ and ANZ 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 ANZ Group Holdings are associated (or correlated) with Mercury NZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury NZ has no effect on the direction of ANZ Group i.e., ANZ Group and Mercury NZ go up and down completely randomly.

Pair Corralation between ANZ Group and Mercury NZ

Assuming the 90 days trading horizon ANZ Group Holdings is expected to under-perform the Mercury NZ. But the stock apears to be less risky and, when comparing its historical volatility, ANZ Group Holdings is 9.96 times less risky than Mercury NZ. The stock trades about -0.03 of its potential returns per unit of risk. The Mercury NZ is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  565.00  in Mercury NZ on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Mercury NZ or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

ANZ Group Holdings  vs.  Mercury NZ

ANZ Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANZ Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ANZ Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Mercury NZ

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mercury NZ are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mercury NZ is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ANZ Group and Mercury NZ

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

The idea behind ANZ Group Holdings and Mercury NZ 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.