Correlation Between Gold Road and Macquarie Technology
Can any of the company-specific risk be diversified away by investing in both Gold Road 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 Gold Road and Macquarie Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Road Resources and Macquarie Technology Group, you can compare the effects of market volatilities on Gold Road 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 Gold Road with a short position of Macquarie Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Macquarie Technology.
Diversification Opportunities for Gold Road and Macquarie Technology
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and Macquarie is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Macquarie Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Technology and Gold Road 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 Gold Road Resources 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 Gold Road i.e., Gold Road and Macquarie Technology go up and down completely randomly.
Pair Corralation between Gold Road and Macquarie Technology
Assuming the 90 days trading horizon Gold Road is expected to generate 2.09 times less return on investment than Macquarie Technology. In addition to that, Gold Road is 1.44 times more volatile than Macquarie Technology Group. It trades about 0.02 of its total potential returns per unit of risk. Macquarie Technology Group is currently generating about 0.06 per unit of volatility. If you would invest 6,145 in Macquarie Technology Group on August 31, 2024 and sell it today you would earn a total of 2,652 from holding Macquarie Technology Group or generate 43.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Macquarie Technology Group
Performance |
| Timeline |
| Gold Road Resources |
| Macquarie Technology |
Gold Road and Macquarie Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Macquarie Technology
The main advantage of trading using opposite Gold Road and Macquarie Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road 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.| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Bluescope Steel | Gold Road vs. De Grey Mining |
| Macquarie Technology vs. Hansen Technologies | Macquarie Technology vs. Neurotech International | Macquarie Technology vs. Richmond Vanadium Technology | Macquarie Technology vs. Genetic 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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