Correlation Between Macquarie Technology and Gtn
Can any of the company-specific risk be diversified away by investing in both Macquarie Technology and Gtn 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 Gtn 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 Gtn, you can compare the effects of market volatilities on Macquarie Technology and Gtn 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 Gtn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Technology and Gtn.
Diversification Opportunities for Macquarie Technology and Gtn
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Macquarie and Gtn is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Gtn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gtn 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 Gtn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gtn has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Gtn go up and down completely randomly.
Pair Corralation between Macquarie Technology and Gtn
Assuming the 90 days trading horizon Macquarie Technology is expected to generate 1.13 times less return on investment than Gtn. But when comparing it to its historical volatility, Macquarie Technology Group is 1.14 times less risky than Gtn. It trades about 0.03 of its potential returns per unit of risk. Gtn is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Gtn on August 26, 2024 and sell it today you would earn a total of 2.00 from holding Gtn or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Technology Group vs. Gtn
Performance |
| Timeline |
| Macquarie Technology |
| Gtn |
Macquarie Technology and Gtn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Technology and Gtn
The main advantage of trading using opposite Macquarie Technology and Gtn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Technology position performs unexpectedly, Gtn 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 Gtn will offset losses from the drop in Gtn'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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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