Correlation Between ANZ Group and SOCO
Can any of the company-specific risk be diversified away by investing in both ANZ Group and SOCO 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 SOCO 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 SOCO Corporation, you can compare the effects of market volatilities on ANZ Group and SOCO 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 SOCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANZ Group and SOCO.
Diversification Opportunities for ANZ Group and SOCO
Excellent diversification
The 3 months correlation between ANZ and SOCO is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ANZ Group Holdings and SOCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOCO 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 SOCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOCO has no effect on the direction of ANZ Group i.e., ANZ Group and SOCO go up and down completely randomly.
Pair Corralation between ANZ Group and SOCO
Assuming the 90 days trading horizon ANZ Group Holdings is expected to under-perform the SOCO. But the stock apears to be less risky and, when comparing its historical volatility, ANZ Group Holdings is 24.8 times less risky than SOCO. The stock trades about -0.09 of its potential returns per unit of risk. The SOCO Corporation is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 9.20 in SOCO Corporation on August 26, 2024 and sell it today you would earn a total of 1.80 from holding SOCO Corporation or generate 19.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ANZ Group Holdings vs. SOCO Corp.
Performance |
| Timeline |
| ANZ Group Holdings |
| SOCO |
ANZ Group and SOCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANZ Group and SOCO
The main advantage of trading using opposite ANZ Group and SOCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANZ Group position performs unexpectedly, SOCO 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 SOCO will offset losses from the drop in SOCO's long position.| ANZ Group vs. Healthco Healthcare and | ANZ Group vs. Australian Unity Office | ANZ Group vs. Ramsay Health Care | ANZ Group vs. EP Financial Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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