Correlation Between Verde Clean and ANZ Group

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

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

Diversification Opportunities for Verde Clean and ANZ Group

0.26

Correlation Coefficient

Verde Clean  ANZ Group

Modest diversification

The 3 months correlation between Verde and ANZ is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Verde Clean Fuels and ANZ Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANZ Group Holdings and Verde Clean 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 Verde Clean Fuels are associated (or correlated) with ANZ Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANZ Group Holdings has no effect on the direction of Verde Clean i.e., Verde Clean and ANZ Group go up and down completely randomly.

Pair Corralation between Verde Clean and ANZ Group

Given the investment horizon of 90 days Verde Clean Fuels is expected to under-perform the ANZ Group. In addition to that, Verde Clean is 2.6 times more volatile than ANZ Group Holdings. It trades about -0.23 of its total potential returns per unit of risk. ANZ Group Holdings is currently generating about -0.35 per unit of volatility. If you would invest  2,036  in ANZ Group Holdings on September 14, 2024 and sell it today you would lose (168.00) from holding ANZ Group Holdings or give up 8.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Verde Clean Fuels  vs.  ANZ Group Holdings

Verde Clean Fuels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verde Clean Fuels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Verde Clean is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Verde Clean and ANZ Group

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

The idea behind Verde Clean Fuels and ANZ Group Holdings 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.