Correlation Between Nova Eye and Macquarie
Can any of the company-specific risk be diversified away by investing in both Nova Eye 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 Nova Eye and Macquarie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Eye Medical and Macquarie Group, you can compare the effects of market volatilities on Nova Eye 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 Nova Eye with a short position of Macquarie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Eye and Macquarie.
Diversification Opportunities for Nova Eye and Macquarie
Significant diversification
The 3 months correlation between Nova and Macquarie is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nova Eye Medical and Macquarie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Nova Eye 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 Nova Eye Medical 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 Nova Eye i.e., Nova Eye and Macquarie go up and down completely randomly.
Pair Corralation between Nova Eye and Macquarie
Assuming the 90 days trading horizon Nova Eye is expected to generate 1.63 times less return on investment than Macquarie. In addition to that, Nova Eye is 4.87 times more volatile than Macquarie Group. It trades about 0.01 of its total potential returns per unit of risk. Macquarie Group is currently generating about 0.06 per unit of volatility. If you would invest 16,346 in Macquarie Group on December 6, 2024 and sell it today you would earn a total of 5,798 from holding Macquarie Group or generate 35.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Nova Eye Medical vs. Macquarie Group
Performance |
| Timeline |
| Nova Eye Medical |
| Macquarie Group |
Nova Eye and Macquarie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Eye and Macquarie
The main advantage of trading using opposite Nova Eye and Macquarie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Eye 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.| Nova Eye vs. ChemX Materials | Nova Eye vs. Readytech Holdings | Nova Eye vs. Advanced Braking Technology | Nova Eye vs. Zeotech |
| Macquarie vs. Ras Technology Holdings | Macquarie vs. Genetic Technologies | Macquarie vs. WiseTech Global Limited | Macquarie vs. Mach7 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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