Correlation Between Visa and ANZ Group
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and ANZ Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and ANZ Group Holdings, you can compare the effects of market volatilities on Visa 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 Visa with a short position of ANZ Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and ANZ Group.
Diversification Opportunities for Visa and ANZ Group
Very weak diversification
The 3 months correlation between Visa and ANZ is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and ANZ Group go up and down completely randomly.
Pair Corralation between Visa and ANZ Group
Taking into account the 90-day investment horizon Visa Class A is expected to generate 3.97 times more return on investment than ANZ Group. However, Visa is 3.97 times more volatile than ANZ Group Holdings. It trades about 0.1 of its potential returns per unit of risk. ANZ Group Holdings is currently generating about 0.09 per unit of risk. If you would invest 22,047 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 9,461 from holding Visa Class A or generate 42.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.94% |
| Values | Daily Returns |
Visa Class A vs. ANZ Group Holdings
Performance |
| Timeline |
| Visa Class A |
| ANZ Group Holdings |
Visa and ANZ Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and ANZ Group
The main advantage of trading using opposite Visa and ANZ Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| ANZ Group vs. EVE Health Group | ANZ Group vs. Autosports Group | ANZ Group vs. Beston Global Food | ANZ Group vs. Queste Communications |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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