Correlation Between Nova Eye and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both Nova Eye and Macquarie Group 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 Group 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 Ltd, you can compare the effects of market volatilities on Nova Eye and Macquarie Group 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 Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Eye and Macquarie Group.
Diversification Opportunities for Nova Eye and Macquarie Group
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nova and Macquarie is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nova Eye Medical and Macquarie Group Ltd 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 Group. 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 Group go up and down completely randomly.
Pair Corralation between Nova Eye and Macquarie Group
Assuming the 90 days trading horizon Nova Eye Medical is expected to under-perform the Macquarie Group. In addition to that, Nova Eye is 17.51 times more volatile than Macquarie Group Ltd. It trades about -0.11 of its total potential returns per unit of risk. Macquarie Group Ltd is currently generating about 0.07 per unit of volatility. If you would invest 10,503 in Macquarie Group Ltd on August 29, 2024 and sell it today you would earn a total of 50.00 from holding Macquarie Group Ltd or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Eye Medical vs. Macquarie Group Ltd
Performance |
| Timeline |
| Nova Eye Medical |
| Macquarie Group |
Nova Eye and Macquarie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Eye and Macquarie Group
The main advantage of trading using opposite Nova Eye and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Eye position performs unexpectedly, Macquarie Group 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 Group will offset losses from the drop in Macquarie Group's long position.The idea behind Nova Eye Medical and Macquarie Group Ltd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Macquarie Group vs. AMP | Macquarie Group vs. Regal Investment | Macquarie Group vs. REGAL ASIAN INVESTMENTS |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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