Correlation Between Macquarie Technology and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both Macquarie Technology and Sonic Healthcare 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 Sonic Healthcare 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 Sonic Healthcare, you can compare the effects of market volatilities on Macquarie Technology and Sonic Healthcare 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 Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Technology and Sonic Healthcare.
Diversification Opportunities for Macquarie Technology and Sonic Healthcare
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Macquarie and Sonic is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Sonic Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare 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 Sonic Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonic Healthcare has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Sonic Healthcare go up and down completely randomly.
Pair Corralation between Macquarie Technology and Sonic Healthcare
Assuming the 90 days trading horizon Macquarie Technology Group is expected to generate 1.43 times more return on investment than Sonic Healthcare. However, Macquarie Technology is 1.43 times more volatile than Sonic Healthcare. It trades about 0.04 of its potential returns per unit of risk. Sonic Healthcare is currently generating about -0.01 per unit of risk. If you would invest 6,980 in Macquarie Technology Group on October 16, 2024 and sell it today you would earn a total of 1,620 from holding Macquarie Technology Group or generate 23.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Technology Group vs. Sonic Healthcare
Performance |
| Timeline |
| Macquarie Technology |
| Sonic Healthcare |
Macquarie Technology and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Technology and Sonic Healthcare
The main advantage of trading using opposite Macquarie Technology and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Technology position performs unexpectedly, Sonic Healthcare 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 Sonic Healthcare will offset losses from the drop in Sonic Healthcare's long position.| Macquarie Technology vs. Event Hospitality and | Macquarie Technology vs. Sonic Healthcare | Macquarie Technology vs. Health and Plant | Macquarie Technology vs. Dexus Convenience Retail |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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