Correlation Between ANZ Group and BHP Group
Can any of the company-specific risk be diversified away by investing in both ANZ Group and BHP 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 ANZ Group and BHP Group 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 BHP Group Limited, you can compare the effects of market volatilities on ANZ Group and BHP 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 ANZ Group with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANZ Group and BHP Group.
Diversification Opportunities for ANZ Group and BHP Group
Very weak diversification
The 3 months correlation between ANZ and BHP is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ANZ Group Holdings and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of ANZ Group i.e., ANZ Group and BHP Group go up and down completely randomly.
Pair Corralation between ANZ Group and BHP Group
Assuming the 90 days trading horizon ANZ Group Holdings is expected to generate 0.22 times more return on investment than BHP Group. However, ANZ Group Holdings is 4.62 times less risky than BHP Group. It trades about 0.06 of its potential returns per unit of risk. BHP Group Limited is currently generating about 0.0 per unit of risk. If you would invest 9,546 in ANZ Group Holdings on August 28, 2024 and sell it today you would earn a total of 774.00 from holding ANZ Group Holdings or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ANZ Group Holdings vs. BHP Group Limited
Performance |
| Timeline |
| ANZ Group Holdings |
| BHP Group Limited |
ANZ Group and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANZ Group and BHP Group
The main advantage of trading using opposite ANZ Group and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANZ Group position performs unexpectedly, BHP 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 BHP Group will offset losses from the drop in BHP Group's long position.| ANZ Group vs. Readytech Holdings | ANZ Group vs. Retail Food Group | ANZ Group vs. Charter Hall Retail | ANZ Group vs. Advanced Braking Technology |
| BHP Group vs. Clime Investment Management | BHP Group vs. Mach7 Technologies | BHP Group vs. Air New Zealand | BHP Group vs. K2 Asset Management |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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