Correlation Between CSL and Macquarie Technology
Can any of the company-specific risk be diversified away by investing in both CSL 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 CSL and Macquarie Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and Macquarie Technology Group, you can compare the effects of market volatilities on CSL 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 CSL with a short position of Macquarie Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Macquarie Technology.
Diversification Opportunities for CSL and Macquarie Technology
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CSL and Macquarie is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Macquarie Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Technology and CSL 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 CSL 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 CSL i.e., CSL and Macquarie Technology go up and down completely randomly.
Pair Corralation between CSL and Macquarie Technology
Assuming the 90 days trading horizon CSL is expected to under-perform the Macquarie Technology. But the stock apears to be less risky and, when comparing its historical volatility, CSL is 1.21 times less risky than Macquarie Technology. The stock trades about -0.16 of its potential returns per unit of risk. The Macquarie Technology Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 8,054 in Macquarie Technology Group on August 29, 2024 and sell it today you would earn a total of 446.00 from holding Macquarie Technology Group or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSL vs. Macquarie Technology Group
Performance |
| Timeline |
| CSL |
| Macquarie Technology |
CSL and Macquarie Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and Macquarie Technology
The main advantage of trading using opposite CSL and Macquarie Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL 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.| CSL vs. Regal Investment | CSL vs. MFF Capital Investments | CSL vs. Mirrabooka Investments | CSL vs. Viva Leisure |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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