Correlation Between BKI Investment and Macquarie Technology
Can any of the company-specific risk be diversified away by investing in both BKI Investment 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 BKI Investment and Macquarie Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BKI Investment and Macquarie Technology Group, you can compare the effects of market volatilities on BKI Investment 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 BKI Investment with a short position of Macquarie Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKI Investment and Macquarie Technology.
Diversification Opportunities for BKI Investment and Macquarie Technology
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between BKI and Macquarie is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and Macquarie Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Technology and BKI Investment 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 BKI Investment 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 BKI Investment i.e., BKI Investment and Macquarie Technology go up and down completely randomly.
Pair Corralation between BKI Investment and Macquarie Technology
Assuming the 90 days trading horizon BKI Investment is expected to generate 226.19 times less return on investment than Macquarie Technology. But when comparing it to its historical volatility, BKI Investment is 2.24 times less risky than Macquarie Technology. It trades about 0.0 of its potential returns per unit of risk. Macquarie Technology Group is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 8,054 in Macquarie Technology Group on August 27, 2024 and sell it today you would earn a total of 620.00 from holding Macquarie Technology Group or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BKI Investment vs. Macquarie Technology Group
Performance |
| Timeline |
| BKI Investment |
| Macquarie Technology |
BKI Investment and Macquarie Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BKI Investment and Macquarie Technology
The main advantage of trading using opposite BKI Investment and Macquarie Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKI Investment 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.| BKI Investment vs. Australian Foundation Investment | BKI Investment vs. GQG Partners DRC | BKI Investment vs. Metrics Master Income | BKI Investment vs. L1 Long Short |
| Macquarie Technology vs. National Australia Bank | Macquarie Technology vs. National Australia Bank | Macquarie Technology vs. Westpac Banking | Macquarie Technology vs. National Australia Bank |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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