Correlation Between Macquarie Technology and BKI Investment
Can any of the company-specific risk be diversified away by investing in both Macquarie Technology and BKI Investment 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 Macquarie Technology and BKI Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Technology Group and BKI Investment, you can compare the effects of market volatilities on Macquarie Technology and BKI Investment 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 Macquarie Technology with a short position of BKI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Technology and BKI Investment.
Diversification Opportunities for Macquarie Technology and BKI Investment
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Macquarie and BKI is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI Investment and Macquarie Technology 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 Macquarie Technology Group are associated (or correlated) with BKI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKI Investment has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and BKI Investment go up and down completely randomly.
Pair Corralation between Macquarie Technology and BKI Investment
Assuming the 90 days trading horizon Macquarie Technology Group is expected to generate 2.18 times more return on investment than BKI Investment. However, Macquarie Technology is 2.18 times more volatile than BKI Investment. It trades about 0.05 of its potential returns per unit of risk. BKI Investment is currently generating about 0.02 per unit of risk. If you would invest 5,825 in Macquarie Technology Group on August 27, 2024 and sell it today you would earn a total of 2,849 from holding Macquarie Technology Group or generate 48.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Technology Group vs. BKI Investment
Performance |
| Timeline |
| Macquarie Technology |
| BKI Investment |
Macquarie Technology and BKI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Technology and BKI Investment
The main advantage of trading using opposite Macquarie Technology and BKI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Technology position performs unexpectedly, BKI Investment 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 BKI Investment will offset losses from the drop in BKI Investment's long position.| Macquarie Technology vs. National Australia Bank | Macquarie Technology vs. National Australia Bank | Macquarie Technology vs. Westpac Banking | Macquarie Technology vs. National Australia Bank |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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