Correlation Between Encounter Resources and Macquarie Technology
Can any of the company-specific risk be diversified away by investing in both Encounter Resources 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 Encounter Resources and Macquarie Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Encounter Resources and Macquarie Technology Group, you can compare the effects of market volatilities on Encounter Resources 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 Encounter Resources with a short position of Macquarie Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encounter Resources and Macquarie Technology.
Diversification Opportunities for Encounter Resources and Macquarie Technology
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Encounter and Macquarie is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Encounter Resources and Macquarie Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Technology and Encounter Resources 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 Encounter Resources 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 Encounter Resources i.e., Encounter Resources and Macquarie Technology go up and down completely randomly.
Pair Corralation between Encounter Resources and Macquarie Technology
Assuming the 90 days trading horizon Encounter Resources is expected to under-perform the Macquarie Technology. In addition to that, Encounter Resources is 2.74 times more volatile than Macquarie Technology Group. It trades about -0.21 of its total potential returns per unit of risk. Macquarie Technology Group is currently generating about -0.1 per unit of volatility. If you would invest 8,767 in Macquarie Technology Group on November 3, 2024 and sell it today you would lose (299.00) from holding Macquarie Technology Group or give up 3.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encounter Resources vs. Macquarie Technology Group
Performance |
| Timeline |
| Encounter Resources |
| Macquarie Technology |
Encounter Resources and Macquarie Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encounter Resources and Macquarie Technology
The main advantage of trading using opposite Encounter Resources and Macquarie Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encounter Resources 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.| Encounter Resources vs. Perpetual Credit Income | Encounter Resources vs. Macquarie Bank Limited | Encounter Resources vs. Qbe Insurance Group | Encounter Resources vs. Infomedia |
| Macquarie Technology vs. Homeco Daily Needs | Macquarie Technology vs. Argo Investments | Macquarie Technology vs. Steamships Trading | Macquarie Technology vs. Data3 |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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