Correlation Between Flagship Investments and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both Flagship Investments 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 Flagship Investments and Macquarie Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flagship Investments and Macquarie Group Ltd, you can compare the effects of market volatilities on Flagship Investments 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 Flagship Investments with a short position of Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flagship Investments and Macquarie Group.
Diversification Opportunities for Flagship Investments and Macquarie Group
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flagship and Macquarie is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Flagship Investments 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 Flagship Investments 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 Flagship Investments i.e., Flagship Investments and Macquarie Group go up and down completely randomly.
Pair Corralation between Flagship Investments and Macquarie Group
Assuming the 90 days trading horizon Flagship Investments is expected to generate 3.46 times more return on investment than Macquarie Group. However, Flagship Investments is 3.46 times more volatile than Macquarie Group Ltd. It trades about 0.05 of its potential returns per unit of risk. Macquarie Group Ltd is currently generating about 0.06 per unit of risk. If you would invest 157.00 in Flagship Investments on November 1, 2024 and sell it today you would earn a total of 55.00 from holding Flagship Investments or generate 35.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flagship Investments vs. Macquarie Group Ltd
Performance |
| Timeline |
| Flagship Investments |
| Macquarie Group |
Flagship Investments and Macquarie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flagship Investments and Macquarie Group
The main advantage of trading using opposite Flagship Investments and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flagship Investments 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.| Flagship Investments vs. Aristocrat Leisure | Flagship Investments vs. Group 6 Metals | Flagship Investments vs. Stelar Metals | Flagship Investments vs. Pure Foods Tasmania |
| Macquarie Group vs. Bank of Queensland | Macquarie Group vs. National Australia Bank | Macquarie Group vs. Insurance Australia Group | Macquarie Group vs. Technology One |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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