Correlation Between ANZ Group and Mystate

Can any of the company-specific risk be diversified away by investing in both ANZ Group and Mystate 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 Mystate 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 Mystate, you can compare the effects of market volatilities on ANZ Group and Mystate 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 Mystate. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANZ Group and Mystate.

Diversification Opportunities for ANZ Group and Mystate

-0.5

Correlation Coefficient

ANZ Group  Mystate

Very good diversification

The 3 months correlation between ANZ and Mystate is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ANZ Group Holdings and Mystate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mystate 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 Mystate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mystate has no effect on the direction of ANZ Group i.e., ANZ Group and Mystate go up and down completely randomly.

Pair Corralation between ANZ Group and Mystate

Assuming the 90 days trading horizon ANZ Group Holdings is expected to under-perform the Mystate. But the stock apears to be less risky and, when comparing its historical volatility, ANZ Group Holdings is 1.88 times less risky than Mystate. The stock trades about -0.02 of its potential returns per unit of risk. The Mystate is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  402.00  in Mystate on September 22, 2024 and sell it today you would earn a total of  23.00  from holding Mystate or generate 5.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ANZ Group Holdings  vs.  Mystate

ANZ Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANZ Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ANZ Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mystate

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mystate are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mystate may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ANZ Group and Mystate

The main advantage of trading using opposite ANZ Group and Mystate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANZ Group position performs unexpectedly, Mystate 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 Mystate will offset losses from the drop in Mystate's long position.

The idea behind ANZ Group Holdings and Mystate 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.