Correlation Between Industrial and ANZ Group

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

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

Diversification Opportunities for Industrial and ANZ Group

0.22

Correlation Coefficient

Industrial  ANZ Group

Modest diversification

The 3 months correlation between Industrial and ANZ is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial 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 Industrial 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 Industrial and Commercial 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 Industrial i.e., Industrial and ANZ Group go up and down completely randomly.

Pair Corralation between Industrial and ANZ Group

Assuming the 90 days horizon Industrial is expected to generate 1.37 times less return on investment than ANZ Group. In addition to that, Industrial is 2.97 times more volatile than ANZ Group Holdings. It trades about 0.04 of its total potential returns per unit of risk. ANZ Group Holdings is currently generating about 0.17 per unit of volatility. If you would invest  1,826  in ANZ Group Holdings on August 8, 2024 and sell it today you would earn a total of  218.00  from holding ANZ Group Holdings or generate 11.94% return on investment over 90 days.

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

Industrial and Commercial  vs.  ANZ Group Holdings

Industrial and Commercial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Industrial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

ANZ Group Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ANZ Group Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, ANZ Group may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Industrial and ANZ Group

The main advantage of trading using opposite Industrial and ANZ Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial 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 Industrial and Commercial 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 Commodity Directory module to find actively traded commodities issued by global exchanges.