Correlation Between Diversified United and Macquarie
Can any of the company-specific risk be diversified away by investing in both Diversified United and Macquarie 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 Diversified United and Macquarie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified United Investment and Macquarie Group, you can compare the effects of market volatilities on Diversified United and Macquarie 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 Diversified United with a short position of Macquarie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified United and Macquarie.
Diversification Opportunities for Diversified United and Macquarie
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Diversified and Macquarie is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Diversified United Investment and Macquarie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Diversified United 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 Diversified United Investment are associated (or correlated) with Macquarie. 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 Diversified United i.e., Diversified United and Macquarie go up and down completely randomly.
Pair Corralation between Diversified United and Macquarie
Assuming the 90 days trading horizon Diversified United is expected to generate 1.46 times less return on investment than Macquarie. But when comparing it to its historical volatility, Diversified United Investment is 2.64 times less risky than Macquarie. It trades about 0.04 of its potential returns per unit of risk. Macquarie Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 23,065 in Macquarie Group on August 25, 2024 and sell it today you would earn a total of 92.00 from holding Macquarie Group or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified United Investment vs. Macquarie Group
Performance |
| Timeline |
| Diversified United |
| Macquarie Group |
Diversified United and Macquarie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified United and Macquarie
The main advantage of trading using opposite Diversified United and Macquarie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified United position performs unexpectedly, Macquarie 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 will offset losses from the drop in Macquarie's long position.| Diversified United vs. Medical Developments International | Diversified United vs. Saferoads Holdings | Diversified United vs. Vulcan Steel | Diversified United vs. Group 6 Metals |
| Macquarie vs. Olivers Real Food | Macquarie vs. BKI Investment | Macquarie vs. Pinnacle Investment Management | Macquarie vs. Diversified United Investment |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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