Correlation Between ANZ Group and Verde Clean

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

Diversification Opportunities for ANZ Group and Verde Clean

-0.05

Correlation Coefficient

ANZ Group  Verde Clean

Good diversification

The 3 months correlation between ANZ and Verde is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ANZ Group Holdings and Verde Clean Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verde Clean Fuels 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 Verde Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verde Clean Fuels has no effect on the direction of ANZ Group i.e., ANZ Group and Verde Clean go up and down completely randomly.

Pair Corralation between ANZ Group and Verde Clean

Assuming the 90 days horizon ANZ Group Holdings is expected to generate 0.45 times more return on investment than Verde Clean. However, ANZ Group Holdings is 2.2 times less risky than Verde Clean. It trades about 0.04 of its potential returns per unit of risk. Verde Clean Fuels is currently generating about -0.07 per unit of risk. If you would invest  1,796  in ANZ Group Holdings on December 26, 2024 and sell it today you would earn a total of  52.00  from holding ANZ Group Holdings or generate 2.9% return on investment over 90 days.

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

ANZ Group Holdings  vs.  Verde Clean Fuels

ANZ Group Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ANZ Group Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, ANZ Group is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Verde Clean Fuels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Verde Clean Fuels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ANZ Group and Verde Clean

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

The idea behind ANZ Group Holdings and Verde Clean Fuels 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.

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..