Correlation Between BSP Financial and Macquarie Bank
Can any of the company-specific risk be diversified away by investing in both BSP Financial 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 BSP Financial and Macquarie Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BSP Financial Group and Macquarie Bank Limited, you can compare the effects of market volatilities on BSP Financial 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 BSP Financial with a short position of Macquarie Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSP Financial and Macquarie Bank.
Diversification Opportunities for BSP Financial and Macquarie Bank
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between BSP and Macquarie is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BSP Financial Group and Macquarie Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Bank and BSP 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 BSP Financial Group 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 BSP Financial i.e., BSP Financial and Macquarie Bank go up and down completely randomly.
Pair Corralation between BSP Financial and Macquarie Bank
Assuming the 90 days trading horizon BSP Financial Group is expected to generate 2.69 times more return on investment than Macquarie Bank. However, BSP Financial is 2.69 times more volatile than Macquarie Bank Limited. It trades about 0.18 of its potential returns per unit of risk. Macquarie Bank Limited is currently generating about 0.06 per unit of risk. If you would invest 630.00 in BSP Financial Group on August 31, 2024 and sell it today you would earn a total of 46.00 from holding BSP Financial Group or generate 7.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
BSP Financial Group vs. Macquarie Bank Limited
Performance |
Timeline |
BSP Financial Group |
Macquarie Bank |
BSP Financial and Macquarie Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BSP Financial and Macquarie Bank
The main advantage of trading using opposite BSP Financial and Macquarie Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BSP Financial 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.BSP Financial vs. K2 Asset Management | BSP Financial vs. Mount Gibson Iron | BSP Financial vs. Bluescope Steel | BSP Financial vs. Hawsons Iron |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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