Correlation Between Compass Diversified and ANZ Group

Can any of the company-specific risk be diversified away by investing in both Compass Diversified 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 Compass Diversified and ANZ Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Compass Diversified Holdings and ANZ Group Holdings, you can compare the effects of market volatilities on Compass Diversified 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 Compass Diversified with a short position of ANZ Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and ANZ Group.

Diversification Opportunities for Compass Diversified and ANZ Group

0.17

Correlation Coefficient

Compass Diversified  ANZ Group

Average diversification

The 3 months correlation between Compass and ANZ is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings 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 Compass Diversified 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 Compass Diversified Holdings 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 Compass Diversified i.e., Compass Diversified and ANZ Group go up and down completely randomly.

Pair Corralation between Compass Diversified and ANZ Group

Assuming the 90 days trading horizon Compass Diversified Holdings is expected to under-perform the ANZ Group. But the preferred stock apears to be less risky and, when comparing its historical volatility, Compass Diversified Holdings is 1.18 times less risky than ANZ Group. The preferred stock trades about -0.03 of its potential returns per unit of risk. The ANZ Group Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,784  in ANZ Group Holdings on December 21, 2024 and sell it today you would earn a total of  54.00  from holding ANZ Group Holdings or generate 3.03% return on investment over 90 days.

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

Compass Diversified Holdings  vs.  ANZ Group Holdings

Compass Diversified

Risk-Adjusted Performance

Very Weak

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

ANZ Group Holdings

Risk-Adjusted Performance

Insignificant

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Compass Diversified and ANZ Group

The main advantage of trading using opposite Compass Diversified and ANZ Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified 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 Compass Diversified Holdings 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.

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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.