Correlation Between Macquarie Technology and Challenger
Can any of the company-specific risk be diversified away by investing in both Macquarie Technology and Challenger 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 Challenger 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 Challenger, you can compare the effects of market volatilities on Macquarie Technology and Challenger 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 Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Technology and Challenger.
Diversification Opportunities for Macquarie Technology and Challenger
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Macquarie and Challenger is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger 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 Challenger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Challenger has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Challenger go up and down completely randomly.
Pair Corralation between Macquarie Technology and Challenger
Assuming the 90 days trading horizon Macquarie Technology Group is expected to under-perform the Challenger. But the stock apears to be less risky and, when comparing its historical volatility, Macquarie Technology Group is 1.1 times less risky than Challenger. The stock trades about -0.18 of its potential returns per unit of risk. The Challenger is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 616.00 in Challenger on September 12, 2024 and sell it today you would lose (27.00) from holding Challenger or give up 4.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Technology Group vs. Challenger
Performance |
| Timeline |
| Macquarie Technology |
| Challenger |
Macquarie Technology and Challenger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Technology and Challenger
The main advantage of trading using opposite Macquarie Technology and Challenger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Technology position performs unexpectedly, Challenger 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 Challenger will offset losses from the drop in Challenger's long position.| Macquarie Technology vs. Aneka Tambang Tbk | Macquarie Technology vs. Macquarie Group | Macquarie Technology vs. Challenger | Macquarie Technology vs. BHP Group Limited |
| Challenger vs. Neurotech International | Challenger vs. Austco Healthcare | Challenger vs. Zoom2u Technologies | Challenger vs. Toys R Us |
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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