Correlation Between Auswide Bank and Macquarie Technology
Can any of the company-specific risk be diversified away by investing in both Auswide Bank 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 Auswide Bank and Macquarie Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auswide Bank and Macquarie Technology Group, you can compare the effects of market volatilities on Auswide Bank 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 Auswide Bank with a short position of Macquarie Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auswide Bank and Macquarie Technology.
Diversification Opportunities for Auswide Bank and Macquarie Technology
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Auswide and Macquarie is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Auswide Bank and Macquarie Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Technology and Auswide Bank 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 Auswide Bank 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 Auswide Bank i.e., Auswide Bank and Macquarie Technology go up and down completely randomly.
Pair Corralation between Auswide Bank and Macquarie Technology
Assuming the 90 days trading horizon Auswide Bank is expected to generate 1.14 times more return on investment than Macquarie Technology. However, Auswide Bank is 1.14 times more volatile than Macquarie Technology Group. It trades about 0.23 of its potential returns per unit of risk. Macquarie Technology Group is currently generating about -0.15 per unit of risk. If you would invest 467.00 in Auswide Bank on November 7, 2024 and sell it today you would earn a total of 38.00 from holding Auswide Bank or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auswide Bank vs. Macquarie Technology Group
Performance |
| Timeline |
| Auswide Bank |
| Macquarie Technology |
Auswide Bank and Macquarie Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auswide Bank and Macquarie Technology
The main advantage of trading using opposite Auswide Bank and Macquarie Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auswide Bank 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.| Auswide Bank vs. Arc Funds | Auswide Bank vs. Home Consortium | Auswide Bank vs. BlackWall Property Funds | Auswide Bank vs. Beam Communications Holdings |
| Macquarie Technology vs. Stelar Metals | Macquarie Technology vs. DMC Mining | Macquarie Technology vs. Aspire Mining | Macquarie Technology vs. Spirit Telecom |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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