Correlation Between Air New and ANZ Group
Can any of the company-specific risk be diversified away by investing in both Air New 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 Air New and ANZ Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and ANZ Group Holdings, you can compare the effects of market volatilities on Air New 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 Air New with a short position of ANZ Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and ANZ Group.
Diversification Opportunities for Air New and ANZ Group
Excellent diversification
The 3 months correlation between Air and ANZ is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand 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 Air New 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 Air New Zealand 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 Air New i.e., Air New and ANZ Group go up and down completely randomly.
Pair Corralation between Air New and ANZ Group
Assuming the 90 days trading horizon Air New Zealand is expected to under-perform the ANZ Group. In addition to that, Air New is 5.45 times more volatile than ANZ Group Holdings. It trades about -0.03 of its total potential returns per unit of risk. ANZ Group Holdings is currently generating about 0.09 per unit of volatility. If you would invest 9,513 in ANZ Group Holdings on September 4, 2024 and sell it today you would earn a total of 818.00 from holding ANZ Group Holdings or generate 8.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Air New Zealand vs. ANZ Group Holdings
Performance |
| Timeline |
| Air New Zealand |
| ANZ Group Holdings |
Air New and ANZ Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and ANZ Group
The main advantage of trading using opposite Air New and ANZ Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New 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.| Air New vs. Aneka Tambang Tbk | Air New vs. Macquarie Group | Air New vs. Macquarie Group Ltd | Air New vs. Challenger |
| ANZ Group vs. Cleanaway Waste Management | ANZ Group vs. Super Retail Group | ANZ Group vs. Nine Entertainment Co | ANZ Group vs. Dexus Convenience Retail |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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