Correlation Between Aussie Broadband and Macquarie Bank
Can any of the company-specific risk be diversified away by investing in both Aussie Broadband and Macquarie Bank 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 Aussie Broadband and Macquarie Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aussie Broadband and Macquarie Bank Limited, you can compare the effects of market volatilities on Aussie Broadband and Macquarie Bank 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 Aussie Broadband with a short position of Macquarie Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aussie Broadband and Macquarie Bank.
Diversification Opportunities for Aussie Broadband and Macquarie Bank
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aussie and Macquarie is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aussie Broadband and Macquarie Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Bank and Aussie Broadband 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 Aussie Broadband are associated (or correlated) with Macquarie Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Bank has no effect on the direction of Aussie Broadband i.e., Aussie Broadband and Macquarie Bank go up and down completely randomly.
Pair Corralation between Aussie Broadband and Macquarie Bank
Assuming the 90 days trading horizon Aussie Broadband is expected to generate 1.17 times less return on investment than Macquarie Bank. In addition to that, Aussie Broadband is 2.74 times more volatile than Macquarie Bank Limited. It trades about 0.03 of its total potential returns per unit of risk. Macquarie Bank Limited is currently generating about 0.09 per unit of volatility. If you would invest 10,359 in Macquarie Bank Limited on September 4, 2024 and sell it today you would earn a total of 139.00 from holding Macquarie Bank Limited or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aussie Broadband vs. Macquarie Bank Limited
Performance |
| Timeline |
| Aussie Broadband |
| Macquarie Bank |
Aussie Broadband and Macquarie Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aussie Broadband and Macquarie Bank
The main advantage of trading using opposite Aussie Broadband and Macquarie Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aussie Broadband position performs unexpectedly, Macquarie Bank 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 Bank will offset losses from the drop in Macquarie Bank's long position.| Aussie Broadband vs. Aneka Tambang Tbk | Aussie Broadband vs. BHP Group Limited | Aussie Broadband vs. Rio Tinto | Aussie Broadband vs. Macquarie Group Ltd |
| Macquarie Bank vs. NEWMONT PORATION CDI | Macquarie Bank vs. Ssr Mining | Macquarie Bank vs. Ora Banda Mining | Macquarie Bank vs. Black Cat Syndicate |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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