Correlation Between Nova Eye and ANZ Group
Can any of the company-specific risk be diversified away by investing in both Nova Eye 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 Nova Eye and ANZ Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Eye Medical and ANZ Group Holdings, you can compare the effects of market volatilities on Nova Eye 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 Nova Eye with a short position of ANZ Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Eye and ANZ Group.
Diversification Opportunities for Nova Eye and ANZ Group
Good diversification
The 3 months correlation between Nova and ANZ is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nova Eye Medical 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 Nova Eye 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 Nova Eye Medical 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 Nova Eye i.e., Nova Eye and ANZ Group go up and down completely randomly.
Pair Corralation between Nova Eye and ANZ Group
Assuming the 90 days trading horizon Nova Eye Medical is expected to under-perform the ANZ Group. In addition to that, Nova Eye is 5.98 times more volatile than ANZ Group Holdings. It trades about -0.11 of its total potential returns per unit of risk. ANZ Group Holdings is currently generating about 0.01 per unit of volatility. If you would invest 10,430 in ANZ Group Holdings on August 29, 2024 and sell it today you would earn a total of 8.00 from holding ANZ Group Holdings or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Eye Medical vs. ANZ Group Holdings
Performance |
| Timeline |
| Nova Eye Medical |
| ANZ Group Holdings |
Nova Eye and ANZ Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Eye and ANZ Group
The main advantage of trading using opposite Nova Eye and ANZ Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Eye 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.The idea behind Nova Eye Medical and ANZ Group Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ANZ Group vs. Australian Unity Office | ANZ Group vs. WiseTech Global Limited | ANZ Group vs. Ainsworth Game Technology | ANZ Group vs. EMvision Medical Devices |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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