Correlation Between Macquarie Technology and Embark Education
Can any of the company-specific risk be diversified away by investing in both Macquarie Technology and Embark Education 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 Embark Education 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 Embark Education Group, you can compare the effects of market volatilities on Macquarie Technology and Embark Education 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 Embark Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Technology and Embark Education.
Diversification Opportunities for Macquarie Technology and Embark Education
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Macquarie and Embark is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Embark Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Education 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 Embark Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Education has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Embark Education go up and down completely randomly.
Pair Corralation between Macquarie Technology and Embark Education
Assuming the 90 days trading horizon Macquarie Technology Group is expected to generate 0.62 times more return on investment than Embark Education. However, Macquarie Technology Group is 1.61 times less risky than Embark Education. It trades about 0.28 of its potential returns per unit of risk. Embark Education Group is currently generating about 0.09 per unit of risk. If you would invest 8,107 in Macquarie Technology Group on August 31, 2024 and sell it today you would earn a total of 635.00 from holding Macquarie Technology Group or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Macquarie Technology Group vs. Embark Education Group
Performance |
| Timeline |
| Macquarie Technology |
| Embark Education |
Macquarie Technology and Embark Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Technology and Embark Education
The main advantage of trading using opposite Macquarie Technology and Embark Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Technology position performs unexpectedly, Embark Education 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 Embark Education will offset losses from the drop in Embark Education's long position.| Macquarie Technology vs. Hansen Technologies | Macquarie Technology vs. Neurotech International | Macquarie Technology vs. Richmond Vanadium Technology | Macquarie Technology vs. Genetic Technologies |
| Embark Education vs. Carlton Investments | Embark Education vs. Diversified United Investment | Embark Education vs. Stelar Metals | Embark Education vs. Centaurus Metals |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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