Correlation Between Advanced Braking and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Macquarie 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 Advanced Braking and Macquarie Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Braking Technology and Macquarie Group Ltd, you can compare the effects of market volatilities on Advanced Braking and Macquarie 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 Advanced Braking with a short position of Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Macquarie Group.
Diversification Opportunities for Advanced Braking and Macquarie Group
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Advanced and Macquarie is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Advanced Braking 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 Advanced Braking Technology are associated (or correlated) with Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Advanced Braking i.e., Advanced Braking and Macquarie Group go up and down completely randomly.
Pair Corralation between Advanced Braking and Macquarie Group
Assuming the 90 days trading horizon Advanced Braking Technology is expected to generate 7.38 times more return on investment than Macquarie Group. However, Advanced Braking is 7.38 times more volatile than Macquarie Group Ltd. It trades about 0.06 of its potential returns per unit of risk. Macquarie Group Ltd is currently generating about 0.06 per unit of risk. If you would invest 4.00 in Advanced Braking Technology on October 13, 2024 and sell it today you would earn a total of 4.30 from holding Advanced Braking Technology or generate 107.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Advanced Braking Technology vs. Macquarie Group Ltd
Performance |
| Timeline |
| Advanced Braking Tec |
| Macquarie Group |
Advanced Braking and Macquarie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Macquarie Group
The main advantage of trading using opposite Advanced Braking and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Macquarie 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 Macquarie Group will offset losses from the drop in Macquarie Group's long position.| Advanced Braking vs. Perseus Mining | Advanced Braking vs. Sky Metals | Advanced Braking vs. Richmond Vanadium Technology | Advanced Braking vs. Truscott Mining Corp |
| Macquarie Group vs. Richmond Vanadium Technology | Macquarie Group vs. Computershare | Macquarie Group vs. Clime Investment Management | Macquarie Group vs. Mirrabooka Investments |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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