Correlation Between K2 Asset and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both K2 Asset 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 K2 Asset and Macquarie Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K2 Asset Management and Macquarie Group Ltd, you can compare the effects of market volatilities on K2 Asset 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 K2 Asset with a short position of Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Asset and Macquarie Group.
Diversification Opportunities for K2 Asset and Macquarie Group
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KAM and Macquarie is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding K2 Asset Management and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and K2 Asset 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 K2 Asset Management 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 K2 Asset i.e., K2 Asset and Macquarie Group go up and down completely randomly.
Pair Corralation between K2 Asset and Macquarie Group
Assuming the 90 days trading horizon K2 Asset Management is expected to generate 12.1 times more return on investment than Macquarie Group. However, K2 Asset is 12.1 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 3.97 in K2 Asset Management on October 18, 2024 and sell it today you would earn a total of 3.13 from holding K2 Asset Management or generate 78.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
K2 Asset Management vs. Macquarie Group Ltd
Performance |
| Timeline |
| K2 Asset Management |
| Macquarie Group |
K2 Asset and Macquarie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Asset and Macquarie Group
The main advantage of trading using opposite K2 Asset and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Asset 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.| K2 Asset vs. Perseus Mining | K2 Asset vs. Hutchison Telecommunications | K2 Asset vs. Talisman Mining | K2 Asset vs. Peel Mining |
| Macquarie Group vs. Ambertech | Macquarie Group vs. Hutchison Telecommunications | Macquarie Group vs. Thorney Technologies | Macquarie Group vs. Spirit Telecom |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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