Correlation Between Main Street and Transurban
Can any of the company-specific risk be diversified away by investing in both Main Street and Transurban 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 Main Street and Transurban into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Capital and Transurban Group, you can compare the effects of market volatilities on Main Street and Transurban 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 Main Street with a short position of Transurban. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Transurban.
Diversification Opportunities for Main Street and Transurban
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Main and Transurban is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group and Main Street 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 Main Street Capital are associated (or correlated) with Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Main Street i.e., Main Street and Transurban go up and down completely randomly.
Pair Corralation between Main Street and Transurban
Given the investment horizon of 90 days Main Street is expected to generate 1.04 times less return on investment than Transurban. But when comparing it to its historical volatility, Main Street Capital is 3.1 times less risky than Transurban. It trades about 0.13 of its potential returns per unit of risk. Transurban Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 794.00 in Transurban Group on September 1, 2024 and sell it today you would earn a total of 92.00 from holding Transurban Group or generate 11.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Main Street Capital vs. Transurban Group
Performance |
| Timeline |
| Main Street Capital |
| Transurban Group |
Main Street and Transurban Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Transurban
The main advantage of trading using opposite Main Street and Transurban positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Transurban 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 Transurban will offset losses from the drop in Transurban's long position.| Main Street vs. Gladstone Capital | Main Street vs. PennantPark Floating Rate | Main Street vs. Horizon Technology Finance | Main Street vs. Prospect Capital |
| Transurban vs. BCE Inc | Transurban vs. Digi International | Transurban vs. Sphere Entertainment Co | Transurban vs. Anterix |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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