Correlation Between ANZ Group and MotorCycle Holdings
Can any of the company-specific risk be diversified away by investing in both ANZ Group and MotorCycle Holdings 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 MotorCycle Holdings 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 MotorCycle Holdings, you can compare the effects of market volatilities on ANZ Group and MotorCycle Holdings 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 MotorCycle Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANZ Group and MotorCycle Holdings.
Diversification Opportunities for ANZ Group and MotorCycle Holdings
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ANZ and MotorCycle is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ANZ Group Holdings and MotorCycle Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MotorCycle Holdings 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 MotorCycle Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MotorCycle Holdings has no effect on the direction of ANZ Group i.e., ANZ Group and MotorCycle Holdings go up and down completely randomly.
Pair Corralation between ANZ Group and MotorCycle Holdings
Assuming the 90 days trading horizon ANZ Group is expected to generate 67.57 times less return on investment than MotorCycle Holdings. But when comparing it to its historical volatility, ANZ Group Holdings is 5.81 times less risky than MotorCycle Holdings. It trades about 0.01 of its potential returns per unit of risk. MotorCycle Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 105.00 in MotorCycle Holdings on September 30, 2024 and sell it today you would earn a total of 84.00 from holding MotorCycle Holdings or generate 80.0% 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. MotorCycle Holdings
Performance |
| Timeline |
| ANZ Group Holdings |
| MotorCycle Holdings |
ANZ Group and MotorCycle Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANZ Group and MotorCycle Holdings
The main advantage of trading using opposite ANZ Group and MotorCycle Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANZ Group position performs unexpectedly, MotorCycle Holdings 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 MotorCycle Holdings will offset losses from the drop in MotorCycle Holdings' long position.| ANZ Group vs. Westpac Banking | ANZ Group vs. Credit Clear | ANZ Group vs. Bravura Solutions | ANZ Group vs. Brainchip Holdings |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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