Correlation Between MFF Capital and ANZ Group

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

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

Diversification Opportunities for MFF Capital and ANZ Group

-0.38

Correlation Coefficient

MFF Capital  ANZ Group

Very good diversification

The 3 months correlation between MFF and ANZ is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments 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 MFF Capital 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 MFF Capital Investments 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 MFF Capital i.e., MFF Capital and ANZ Group go up and down completely randomly.

Pair Corralation between MFF Capital and ANZ Group

Assuming the 90 days trading horizon MFF Capital Investments is expected to under-perform the ANZ Group. In addition to that, MFF Capital is 4.83 times more volatile than ANZ Group Holdings. It trades about -0.1 of its total potential returns per unit of risk. ANZ Group Holdings is currently generating about 0.08 per unit of volatility. If you would invest  10,120  in ANZ Group Holdings on December 19, 2024 and sell it today you would earn a total of  119.00  from holding ANZ Group Holdings or generate 1.18% return on investment over 90 days.

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

MFF Capital Investments  vs.  ANZ Group Holdings

MFF Capital Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days MFF Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ANZ Group Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ANZ Group Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ANZ Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MFF Capital and ANZ Group

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

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.