Correlation Between Homeco Daily and Macquarie Bank
Can any of the company-specific risk be diversified away by investing in both Homeco Daily and Macquarie Bank 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 Homeco Daily and Macquarie Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Homeco Daily Needs and Macquarie Bank Limited, you can compare the effects of market volatilities on Homeco Daily and Macquarie Bank 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 Homeco Daily with a short position of Macquarie Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homeco Daily and Macquarie Bank.
Diversification Opportunities for Homeco Daily and Macquarie Bank
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Homeco and Macquarie is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Homeco Daily Needs and Macquarie Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Bank and Homeco Daily 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 Homeco Daily Needs are associated (or correlated) with Macquarie Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Bank has no effect on the direction of Homeco Daily i.e., Homeco Daily and Macquarie Bank go up and down completely randomly.
Pair Corralation between Homeco Daily and Macquarie Bank
Assuming the 90 days trading horizon Homeco Daily Needs is expected to generate 3.72 times more return on investment than Macquarie Bank. However, Homeco Daily is 3.72 times more volatile than Macquarie Bank Limited. It trades about 0.03 of its potential returns per unit of risk. Macquarie Bank Limited is currently generating about 0.07 per unit of risk. If you would invest 114.00 in Homeco Daily Needs on August 29, 2024 and sell it today you would earn a total of 12.00 from holding Homeco Daily Needs or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Homeco Daily Needs vs. Macquarie Bank Limited
Performance |
| Timeline |
| Homeco Daily Needs |
| Macquarie Bank |
Homeco Daily and Macquarie Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Homeco Daily and Macquarie Bank
The main advantage of trading using opposite Homeco Daily and Macquarie Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homeco Daily position performs unexpectedly, Macquarie Bank 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 Bank will offset losses from the drop in Macquarie Bank's long position.| Homeco Daily vs. Scentre Group | Homeco Daily vs. Vicinity Centres Re | Homeco Daily vs. Charter Hall Retail | Homeco Daily vs. Cromwell Property Group |
| Macquarie Bank vs. Ssr Mining | Macquarie Bank vs. Ora Banda Mining | Macquarie Bank vs. Black Cat Syndicate | Macquarie Bank vs. Champion Iron |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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