Correlation Between ANZ Group and Kip McGrath
Can any of the company-specific risk be diversified away by investing in both ANZ Group and Kip McGrath 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 Kip McGrath 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 Kip McGrath Education, you can compare the effects of market volatilities on ANZ Group and Kip McGrath 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 Kip McGrath. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANZ Group and Kip McGrath.
Diversification Opportunities for ANZ Group and Kip McGrath
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ANZ and Kip is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ANZ Group Holdings and Kip McGrath Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kip McGrath Education 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 Kip McGrath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kip McGrath Education has no effect on the direction of ANZ Group i.e., ANZ Group and Kip McGrath go up and down completely randomly.
Pair Corralation between ANZ Group and Kip McGrath
Assuming the 90 days trading horizon ANZ Group is expected to generate 10.23 times less return on investment than Kip McGrath. But when comparing it to its historical volatility, ANZ Group Holdings is 7.96 times less risky than Kip McGrath. It trades about 0.02 of its potential returns per unit of risk. Kip McGrath Education is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 46.00 in Kip McGrath Education on September 14, 2024 and sell it today you would earn a total of 3.00 from holding Kip McGrath Education or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ANZ Group Holdings vs. Kip McGrath Education
Performance |
| Timeline |
| ANZ Group Holdings |
| Kip McGrath Education |
ANZ Group and Kip McGrath Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANZ Group and Kip McGrath
The main advantage of trading using opposite ANZ Group and Kip McGrath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANZ Group position performs unexpectedly, Kip McGrath 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 Kip McGrath will offset losses from the drop in Kip McGrath's long position.| ANZ Group vs. Auctus Alternative Investments | ANZ Group vs. Argo Investments | ANZ Group vs. Mayfield Childcare | ANZ Group vs. Ainsworth Game Technology |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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