Correlation Between ISharesGlobal 100 and ANZ SP

Can any of the company-specific risk be diversified away by investing in both ISharesGlobal 100 and ANZ SP 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 ISharesGlobal 100 and ANZ SP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iSharesGlobal 100 and ANZ SP 500, you can compare the effects of market volatilities on ISharesGlobal 100 and ANZ SP 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 ISharesGlobal 100 with a short position of ANZ SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ISharesGlobal 100 and ANZ SP.

Diversification Opportunities for ISharesGlobal 100 and ANZ SP

-0.36

Correlation Coefficient

ISharesGlobal 100  ANZ SP

Very good diversification

The 3 months correlation between ISharesGlobal and ANZ is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding iSharesGlobal 100 and ANZ SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANZ SP 500 and ISharesGlobal 100 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 iSharesGlobal 100 are associated (or correlated) with ANZ SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANZ SP 500 has no effect on the direction of ISharesGlobal 100 i.e., ISharesGlobal 100 and ANZ SP go up and down completely randomly.

Pair Corralation between ISharesGlobal 100 and ANZ SP

Assuming the 90 days trading horizon iSharesGlobal 100 is expected to under-perform the ANZ SP. But the etf apears to be less risky and, when comparing its historical volatility, iSharesGlobal 100 is 1.26 times less risky than ANZ SP. The etf trades about -0.12 of its potential returns per unit of risk. The ANZ SP 500 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,574  in ANZ SP 500 on December 24, 2024 and sell it today you would earn a total of  46.00  from holding ANZ SP 500 or generate 2.92% return on investment over 90 days.

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

iSharesGlobal 100  vs.  ANZ SP 500

iSharesGlobal 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days iSharesGlobal 100 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ISharesGlobal 100 is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ANZ SP 500

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ANZ SP 500 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ANZ SP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ISharesGlobal 100 and ANZ SP

The main advantage of trading using opposite ISharesGlobal 100 and ANZ SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ISharesGlobal 100 position performs unexpectedly, ANZ SP 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 SP will offset losses from the drop in ANZ SP's long position.

The idea behind iSharesGlobal 100 and ANZ SP 500 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.