Correlation Between 88 Energy and Macquarie Technology
Can any of the company-specific risk be diversified away by investing in both 88 Energy and Macquarie Technology 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 88 Energy and Macquarie Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 88 Energy and Macquarie Technology Group, you can compare the effects of market volatilities on 88 Energy and Macquarie Technology 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 88 Energy with a short position of Macquarie Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of 88 Energy and Macquarie Technology.
Diversification Opportunities for 88 Energy and Macquarie Technology
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 88E and Macquarie is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding 88 Energy and Macquarie Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Technology and 88 Energy 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 88 Energy are associated (or correlated) with Macquarie Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Technology has no effect on the direction of 88 Energy i.e., 88 Energy and Macquarie Technology go up and down completely randomly.
Pair Corralation between 88 Energy and Macquarie Technology
Assuming the 90 days trading horizon 88 Energy is expected to generate 9.14 times more return on investment than Macquarie Technology. However, 88 Energy is 9.14 times more volatile than Macquarie Technology Group. It trades about 0.06 of its potential returns per unit of risk. Macquarie Technology Group is currently generating about 0.05 per unit of risk. If you would invest 0.99 in 88 Energy on September 14, 2024 and sell it today you would lose (0.79) from holding 88 Energy or give up 79.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
88 Energy vs. Macquarie Technology Group
Performance |
| Timeline |
| 88 Energy |
| Macquarie Technology |
88 Energy and Macquarie Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 88 Energy and Macquarie Technology
The main advantage of trading using opposite 88 Energy and Macquarie Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 88 Energy position performs unexpectedly, Macquarie Technology 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 Macquarie Technology will offset losses from the drop in Macquarie Technology's long position.| 88 Energy vs. Westpac Banking | 88 Energy vs. ABACUS STORAGE KING | 88 Energy vs. Odyssey Energy | 88 Energy vs. Sims |
| Macquarie Technology vs. Energy Resources | Macquarie Technology vs. 88 Energy | Macquarie Technology vs. Amani Gold | Macquarie Technology vs. A1 Investments Resources |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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