Correlation Between Macquarie Technology and Indiana Resources
Can any of the company-specific risk be diversified away by investing in both Macquarie Technology and Indiana Resources 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 Indiana Resources 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 Indiana Resources, you can compare the effects of market volatilities on Macquarie Technology and Indiana Resources 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 Indiana Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Technology and Indiana Resources.
Diversification Opportunities for Macquarie Technology and Indiana Resources
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Macquarie and Indiana is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Indiana Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indiana Resources 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 Indiana Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indiana Resources has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Indiana Resources go up and down completely randomly.
Pair Corralation between Macquarie Technology and Indiana Resources
Assuming the 90 days trading horizon Macquarie Technology is expected to generate 4.75 times less return on investment than Indiana Resources. In addition to that, Macquarie Technology is 1.01 times more volatile than Indiana Resources. It trades about 0.06 of its total potential returns per unit of risk. Indiana Resources is currently generating about 0.27 per unit of volatility. If you would invest 6.10 in Indiana Resources on October 23, 2024 and sell it today you would earn a total of 0.40 from holding Indiana Resources or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Technology Group vs. Indiana Resources
Performance |
| Timeline |
| Macquarie Technology |
| Indiana Resources |
Macquarie Technology and Indiana Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Technology and Indiana Resources
The main advantage of trading using opposite Macquarie Technology and Indiana Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Technology position performs unexpectedly, Indiana Resources 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 Indiana Resources will offset losses from the drop in Indiana Resources' long position.| Macquarie Technology vs. Southern Cross Gold | Macquarie Technology vs. Tlou Energy | Macquarie Technology vs. Encounter Resources | Macquarie Technology vs. Elevate Uranium |
| Indiana Resources vs. Playside Studios | Indiana Resources vs. Ramsay Health Care | Indiana Resources vs. Charter Hall Education | Indiana Resources vs. Sports Entertainment Group |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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