Correlation Between ANZ Group and Industrial

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Can any of the company-specific risk be diversified away by investing in both ANZ Group and Industrial 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 Industrial 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 Industrial and Commercial, you can compare the effects of market volatilities on ANZ Group and Industrial 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 Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANZ Group and Industrial.

Diversification Opportunities for ANZ Group and Industrial

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between ANZ and Industrial is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ANZ Group Holdings and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial 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 Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of ANZ Group i.e., ANZ Group and Industrial go up and down completely randomly.

Pair Corralation between ANZ Group and Industrial

Assuming the 90 days horizon ANZ Group Holdings is expected to generate 0.49 times more return on investment than Industrial. However, ANZ Group Holdings is 2.03 times less risky than Industrial. It trades about 0.11 of its potential returns per unit of risk. Industrial and Commercial is currently generating about 0.05 per unit of risk. If you would invest  1,434  in ANZ Group Holdings on September 8, 2024 and sell it today you would earn a total of  204.00  from holding ANZ Group Holdings or generate 14.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy10.8%
ValuesDaily Returns

ANZ Group Holdings  vs.  Industrial and Commercial

 Performance 
       Timeline  
ANZ Group Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 nearly stable technical and fundamental indicators, ANZ Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Industrial and Commercial 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Industrial reported solid returns over the last few months and may actually be approaching a breakup point.

ANZ Group and Industrial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ANZ Group and Industrial

The main advantage of trading using opposite ANZ Group and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANZ Group position performs unexpectedly, Industrial 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 Industrial will offset losses from the drop in Industrial's long position.
The idea behind ANZ Group Holdings and Industrial and Commercial 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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