Correlation Between Macquarie Technology and Johns Lyng
Can any of the company-specific risk be diversified away by investing in both Macquarie Technology and Johns Lyng 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 Johns Lyng 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 Johns Lyng Group, you can compare the effects of market volatilities on Macquarie Technology and Johns Lyng 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 Johns Lyng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Technology and Johns Lyng.
Diversification Opportunities for Macquarie Technology and Johns Lyng
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Macquarie and Johns is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Johns Lyng Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johns Lyng Group 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 Johns Lyng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johns Lyng Group has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Johns Lyng go up and down completely randomly.
Pair Corralation between Macquarie Technology and Johns Lyng
Assuming the 90 days trading horizon Macquarie Technology is expected to generate 1.36 times less return on investment than Johns Lyng. But when comparing it to its historical volatility, Macquarie Technology Group is 1.66 times less risky than Johns Lyng. It trades about 0.24 of its potential returns per unit of risk. Johns Lyng Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 383.00 in Johns Lyng Group on September 1, 2024 and sell it today you would earn a total of 35.00 from holding Johns Lyng Group or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Macquarie Technology Group vs. Johns Lyng Group
Performance |
| Timeline |
| Macquarie Technology |
| Johns Lyng Group |
Macquarie Technology and Johns Lyng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Technology and Johns Lyng
The main advantage of trading using opposite Macquarie Technology and Johns Lyng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Technology position performs unexpectedly, Johns Lyng 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 Johns Lyng will offset losses from the drop in Johns Lyng's long position.| Macquarie Technology vs. National Australia Bank | Macquarie Technology vs. Westpac Banking | Macquarie Technology vs. National Australia Bank | Macquarie Technology vs. Commonwealth Bank of |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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