Correlation Between Latitude Financial and Macquarie
Can any of the company-specific risk be diversified away by investing in both Latitude Financial 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 Latitude Financial and Macquarie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Latitude Financial Services and Macquarie Group, you can compare the effects of market volatilities on Latitude Financial 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 Latitude Financial with a short position of Macquarie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Latitude Financial and Macquarie.
Diversification Opportunities for Latitude Financial and Macquarie
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Latitude and Macquarie is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Latitude Financial Services and Macquarie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Latitude Financial 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 Latitude Financial Services 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 Latitude Financial i.e., Latitude Financial and Macquarie go up and down completely randomly.
Pair Corralation between Latitude Financial and Macquarie
Assuming the 90 days trading horizon Latitude Financial is expected to generate 9.94 times less return on investment than Macquarie. But when comparing it to its historical volatility, Latitude Financial Services is 1.57 times less risky than Macquarie. It trades about 0.0 of its potential returns per unit of risk. Macquarie Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 23,027 in Macquarie Group on August 30, 2024 and sell it today you would earn a total of 139.00 from holding Macquarie Group or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Latitude Financial Services vs. Macquarie Group
Performance |
| Timeline |
| Latitude Financial |
| Macquarie Group |
Latitude Financial and Macquarie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Latitude Financial and Macquarie
The main advantage of trading using opposite Latitude Financial and Macquarie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Latitude Financial 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.| Latitude Financial vs. Treasury Wine Estates | Latitude Financial vs. BKI Investment | Latitude Financial vs. Australian United Investment | Latitude Financial vs. Nine Entertainment Co |
| Macquarie vs. Hutchison Telecommunications | Macquarie vs. Iron Road | Macquarie vs. Kingsrose Mining | Macquarie vs. Andean Silver Limited |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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