Correlation Between Eastern and ANZ Group
Can any of the company-specific risk be diversified away by investing in both Eastern and ANZ 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 Eastern and ANZ Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and ANZ Group Holdings, you can compare the effects of market volatilities on Eastern and ANZ 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 Eastern with a short position of ANZ Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and ANZ Group.
Diversification Opportunities for Eastern and ANZ Group
Good diversification
The 3 months correlation between Eastern and ANZ is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and ANZ Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANZ Group Holdings and Eastern 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 Eastern Co are associated (or correlated) with ANZ Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANZ Group Holdings has no effect on the direction of Eastern i.e., Eastern and ANZ Group go up and down completely randomly.
Pair Corralation between Eastern and ANZ Group
Considering the 90-day investment horizon Eastern Co is expected to generate 1.83 times more return on investment than ANZ Group. However, Eastern is 1.83 times more volatile than ANZ Group Holdings. It trades about 0.19 of its potential returns per unit of risk. ANZ Group Holdings is currently generating about -0.38 per unit of risk. If you would invest 2,666 in Eastern Co on September 13, 2024 and sell it today you would earn a total of 227.00 from holding Eastern Co or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Eastern Co vs. ANZ Group Holdings
Performance |
| Timeline |
| Eastern |
| ANZ Group Holdings |
Eastern and ANZ Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and ANZ Group
The main advantage of trading using opposite Eastern and ANZ Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern position performs unexpectedly, ANZ 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 ANZ Group will offset losses from the drop in ANZ Group's long position.| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
| ANZ Group vs. Summit Environmental | ANZ Group vs. Viemed Healthcare | ANZ Group vs. LENSAR Inc | ANZ Group vs. Olympic Steel |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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