Correlation Between Cochlear and Macquarie Technology
Can any of the company-specific risk be diversified away by investing in both Cochlear 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 Cochlear and Macquarie Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cochlear and Macquarie Technology Group, you can compare the effects of market volatilities on Cochlear 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 Cochlear with a short position of Macquarie Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cochlear and Macquarie Technology.
Diversification Opportunities for Cochlear and Macquarie Technology
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cochlear and Macquarie is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cochlear and Macquarie Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Technology and Cochlear 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 Cochlear 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 Cochlear i.e., Cochlear and Macquarie Technology go up and down completely randomly.
Pair Corralation between Cochlear and Macquarie Technology
Assuming the 90 days trading horizon Cochlear is expected to generate 3.2 times less return on investment than Macquarie Technology. But when comparing it to its historical volatility, Cochlear is 1.21 times less risky than Macquarie Technology. It trades about 0.03 of its potential returns per unit of risk. Macquarie Technology Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,587 in Macquarie Technology Group on September 4, 2024 and sell it today you would earn a total of 2,207 from holding Macquarie Technology Group or generate 33.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cochlear vs. Macquarie Technology Group
Performance |
| Timeline |
| Cochlear |
| Macquarie Technology |
Cochlear and Macquarie Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cochlear and Macquarie Technology
The main advantage of trading using opposite Cochlear and Macquarie Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cochlear 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.| Cochlear vs. K2 Asset Management | Cochlear vs. Regal Funds Management | Cochlear vs. Auswide Bank | Cochlear vs. Pioneer Credit |
| Macquarie Technology vs. FSA Group | Macquarie Technology vs. Tamawood | Macquarie Technology vs. Cochlear | Macquarie Technology vs. Rea Group |
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 Stocks Directory module to find actively traded stocks across global markets.
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