Correlation Between ANZ Group and Bank of America
Can any of the company-specific risk be diversified away by investing in both ANZ Group and Bank of America 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 Bank of America 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 Bank of America, you can compare the effects of market volatilities on ANZ Group and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANZ Group and Bank of America.
Diversification Opportunities for ANZ Group and Bank of America
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ANZ and Bank is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ANZ Group Holdings and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of ANZ Group i.e., ANZ Group and Bank of America go up and down completely randomly.
Pair Corralation between ANZ Group and Bank of America
Assuming the 90 days horizon ANZ Group Holdings is expected to generate 2.26 times more return on investment than Bank of America. However, ANZ Group is 2.26 times more volatile than Bank of America. It trades about 0.09 of its potential returns per unit of risk. Bank of America is currently generating about 0.04 per unit of risk. If you would invest 1,834 in ANZ Group Holdings on August 24, 2024 and sell it today you would earn a total of 263.00 from holding ANZ Group Holdings or generate 14.34% 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. Bank of America
Performance |
| Timeline |
| ANZ Group Holdings |
| Bank of America |
ANZ Group and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANZ Group and Bank of America
The main advantage of trading using opposite ANZ Group and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANZ Group position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| ANZ Group vs. JPMorgan Chase Co | ANZ Group vs. JPMorgan Chase Co | ANZ Group vs. Bank of America | ANZ Group vs. Destiny Tech100 |
| Bank of America vs. Bank of America | Bank of America vs. Wells Fargo | Bank of America vs. Bank of America | Bank of America vs. China Construction Bank |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |