Correlation Between Macquarie Technology and COAST ENTERTAINMENT
Can any of the company-specific risk be diversified away by investing in both Macquarie Technology and COAST ENTERTAINMENT 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 COAST ENTERTAINMENT 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 COAST ENTERTAINMENT HOLDINGS, you can compare the effects of market volatilities on Macquarie Technology and COAST ENTERTAINMENT 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 COAST ENTERTAINMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Technology and COAST ENTERTAINMENT.
Diversification Opportunities for Macquarie Technology and COAST ENTERTAINMENT
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Macquarie and COAST is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and COAST ENTERTAINMENT HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COAST ENTERTAINMENT 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 COAST ENTERTAINMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COAST ENTERTAINMENT has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and COAST ENTERTAINMENT go up and down completely randomly.
Pair Corralation between Macquarie Technology and COAST ENTERTAINMENT
Assuming the 90 days trading horizon Macquarie Technology Group is expected to generate 0.69 times more return on investment than COAST ENTERTAINMENT. However, Macquarie Technology Group is 1.46 times less risky than COAST ENTERTAINMENT. It trades about 0.17 of its potential returns per unit of risk. COAST ENTERTAINMENT HOLDINGS is currently generating about 0.01 per unit of risk. If you would invest 8,565 in Macquarie Technology Group on October 12, 2024 and sell it today you would earn a total of 379.00 from holding Macquarie Technology Group or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Technology Group vs. COAST ENTERTAINMENT HOLDINGS
Performance |
| Timeline |
| Macquarie Technology |
| COAST ENTERTAINMENT |
Macquarie Technology and COAST ENTERTAINMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Technology and COAST ENTERTAINMENT
The main advantage of trading using opposite Macquarie Technology and COAST ENTERTAINMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Technology position performs unexpectedly, COAST ENTERTAINMENT 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 COAST ENTERTAINMENT will offset losses from the drop in COAST ENTERTAINMENT's long position.| Macquarie Technology vs. WiseTech Global Limited | Macquarie Technology vs. Collins Foods | Macquarie Technology vs. TPG Telecom | Macquarie Technology vs. Beston Global Food |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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