Correlation Between Global Health and Macquarie Technology
Can any of the company-specific risk be diversified away by investing in both Global Health 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 Global Health and Macquarie Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Health and Macquarie Technology Group, you can compare the effects of market volatilities on Global Health 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 Global Health with a short position of Macquarie Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and Macquarie Technology.
Diversification Opportunities for Global Health and Macquarie Technology
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Macquarie is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Global Health and Macquarie Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Technology and Global Health 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 Global Health 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 Global Health i.e., Global Health and Macquarie Technology go up and down completely randomly.
Pair Corralation between Global Health and Macquarie Technology
Assuming the 90 days trading horizon Global Health is expected to generate 3.75 times more return on investment than Macquarie Technology. However, Global Health is 3.75 times more volatile than Macquarie Technology Group. It trades about 0.02 of its potential returns per unit of risk. Macquarie Technology Group is currently generating about -0.17 per unit of risk. If you would invest 14.00 in Global Health on October 29, 2024 and sell it today you would earn a total of 0.00 from holding Global Health or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Health vs. Macquarie Technology Group
Performance |
| Timeline |
| Global Health |
| Macquarie Technology |
Global Health and Macquarie Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Health and Macquarie Technology
The main advantage of trading using opposite Global Health and Macquarie Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Health 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.| Global Health vs. Bell Financial Group | Global Health vs. Gold Road Resources | Global Health vs. Iron Road | Global Health vs. Medibank Private |
| Macquarie Technology vs. Southern Cross Media | Macquarie Technology vs. Sports Entertainment Group | Macquarie Technology vs. Perseus Mining | Macquarie Technology vs. Truscott Mining Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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