Correlation Between Amazon and ANZ Group
Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and ANZ Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and ANZ Group Holdings, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of ANZ Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and ANZ Group.
Diversification Opportunities for Amazon and ANZ Group
Very good diversification
The 3 months correlation between Amazon and ANZ is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc 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 Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and ANZ Group go up and down completely randomly.
Pair Corralation between Amazon and ANZ Group
Given the investment horizon of 90 days Amazon is expected to generate 5.82 times less return on investment than ANZ Group. In addition to that, Amazon is 1.15 times more volatile than ANZ Group Holdings. It trades about 0.09 of its total potential returns per unit of risk. ANZ Group Holdings is currently generating about 0.57 per unit of volatility. If you would invest 1,540 in ANZ Group Holdings on August 31, 2024 and sell it today you would earn a total of 98.00 from holding ANZ Group Holdings or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 1.87% |
| Values | Daily Returns |
Amazon Inc vs. ANZ Group Holdings
Performance |
| Timeline |
| Amazon Inc |
| ANZ Group Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and ANZ Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and ANZ Group
The main advantage of trading using opposite Amazon and ANZ Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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 Amazon Inc 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.| ANZ Group vs. Paysafe | ANZ Group vs. Lincoln Electric Holdings | ANZ Group vs. Allient | ANZ Group vs. Senmiao Technology |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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