Correlation Between Magellan Financial and ANZ Group

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

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

Diversification Opportunities for Magellan Financial and ANZ Group

-0.5

Correlation Coefficient

Magellan Financial  ANZ Group

Very good diversification

The 3 months correlation between Magellan and ANZ is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group 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 Magellan Financial 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 Magellan Financial Group 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 Magellan Financial i.e., Magellan Financial and ANZ Group go up and down completely randomly.

Pair Corralation between Magellan Financial and ANZ Group

Assuming the 90 days trading horizon Magellan Financial Group is expected to generate 9.05 times more return on investment than ANZ Group. However, Magellan Financial is 9.05 times more volatile than ANZ Group Holdings. It trades about 0.02 of its potential returns per unit of risk. ANZ Group Holdings is currently generating about 0.06 per unit of risk. If you would invest  735.00  in Magellan Financial Group on December 2, 2024 and sell it today you would earn a total of  72.00  from holding Magellan Financial Group or generate 9.8% return on investment over 90 days.

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

Magellan Financial Group  vs.  ANZ Group Holdings

Magellan Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magellan Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental 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.

ANZ Group Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANZ Group Holdings are ranked lower than 10 (%) 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 Magellan Financial and ANZ Group

The main advantage of trading using opposite Magellan Financial and ANZ Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial 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 Magellan Financial Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.