Correlation Between Embark Education and Macquarie Technology
Can any of the company-specific risk be diversified away by investing in both Embark Education 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 Embark Education and Macquarie Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embark Education Group and Macquarie Technology Group, you can compare the effects of market volatilities on Embark Education 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 Embark Education with a short position of Macquarie Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Education and Macquarie Technology.
Diversification Opportunities for Embark Education and Macquarie Technology
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Embark and Macquarie is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Embark Education Group and Macquarie Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Technology and Embark Education 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 Embark Education Group 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 Embark Education i.e., Embark Education and Macquarie Technology go up and down completely randomly.
Pair Corralation between Embark Education and Macquarie Technology
Assuming the 90 days trading horizon Embark Education Group is expected to generate 1.13 times more return on investment than Macquarie Technology. However, Embark Education is 1.13 times more volatile than Macquarie Technology Group. It trades about 0.07 of its potential returns per unit of risk. Macquarie Technology Group is currently generating about 0.06 per unit of risk. If you would invest 51.00 in Embark Education Group on August 31, 2024 and sell it today you would earn a total of 29.00 from holding Embark Education Group or generate 56.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embark Education Group vs. Macquarie Technology Group
Performance |
| Timeline |
| Embark Education |
| Macquarie Technology |
Embark Education and Macquarie Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embark Education and Macquarie Technology
The main advantage of trading using opposite Embark Education and Macquarie Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embark Education 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.| Embark Education vs. Carlton Investments | Embark Education vs. Diversified United Investment | Embark Education vs. Stelar Metals | Embark Education vs. Centaurus Metals |
| Macquarie Technology vs. Hansen Technologies | Macquarie Technology vs. Neurotech International | Macquarie Technology vs. Richmond Vanadium Technology | Macquarie Technology vs. Genetic Technologies |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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