Correlation Between G8 Education and Macquarie
Can any of the company-specific risk be diversified away by investing in both G8 Education 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 G8 Education and Macquarie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 Education and Macquarie Group, you can compare the effects of market volatilities on G8 Education 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 G8 Education with a short position of Macquarie. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 Education and Macquarie.
Diversification Opportunities for G8 Education and Macquarie
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GEM and Macquarie is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding G8 Education and Macquarie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and G8 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 G8 Education 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 G8 Education i.e., G8 Education and Macquarie go up and down completely randomly.
Pair Corralation between G8 Education and Macquarie
Assuming the 90 days trading horizon G8 Education is expected to generate 1.99 times less return on investment than Macquarie. In addition to that, G8 Education is 1.31 times more volatile than Macquarie Group. It trades about 0.12 of its total potential returns per unit of risk. Macquarie Group is currently generating about 0.3 per unit of volatility. If you would invest 22,309 in Macquarie Group on November 4, 2024 and sell it today you would earn a total of 1,771 from holding Macquarie Group or generate 7.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G8 Education vs. Macquarie Group
Performance |
| Timeline |
| G8 Education |
| Macquarie Group |
G8 Education and Macquarie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G8 Education and Macquarie
The main advantage of trading using opposite G8 Education and Macquarie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 Education 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.| G8 Education vs. Mirrabooka Investments | G8 Education vs. Embark Education Group | G8 Education vs. Arc Funds | G8 Education vs. Hudson Investment Group |
| Macquarie vs. Land Homes Group | Macquarie vs. Ambertech | Macquarie vs. Australian Unity Office | Macquarie vs. Ras Technology Holdings |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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