Correlation Between Macquarie Bank and Auswide Bank
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and Auswide Bank 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 Bank and Auswide Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Bank Limited and Auswide Bank, you can compare the effects of market volatilities on Macquarie Bank and Auswide Bank 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 Bank with a short position of Auswide Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and Auswide Bank.
Diversification Opportunities for Macquarie Bank and Auswide Bank
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Macquarie and Auswide is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and Auswide Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auswide Bank and Macquarie Bank 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 Bank Limited are associated (or correlated) with Auswide Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auswide Bank has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and Auswide Bank go up and down completely randomly.
Pair Corralation between Macquarie Bank and Auswide Bank
Assuming the 90 days trading horizon Macquarie Bank is expected to generate 23.79 times less return on investment than Auswide Bank. But when comparing it to its historical volatility, Macquarie Bank Limited is 7.32 times less risky than Auswide Bank. It trades about 0.06 of its potential returns per unit of risk. Auswide Bank is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 482.00 in Auswide Bank on November 18, 2024 and sell it today you would earn a total of 29.00 from holding Auswide Bank or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Bank Limited vs. Auswide Bank
Performance |
| Timeline |
| Macquarie Bank |
| Auswide Bank |
Macquarie Bank and Auswide Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and Auswide Bank
The main advantage of trading using opposite Macquarie Bank and Auswide Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, Auswide Bank 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 Auswide Bank will offset losses from the drop in Auswide Bank's long position.| Macquarie Bank vs. Platinum Asia Investments | Macquarie Bank vs. Insurance Australia Group | Macquarie Bank vs. Computershare | Macquarie Bank vs. Argo Investments |
| Auswide Bank vs. MetalsGrove Mining | Auswide Bank vs. Black Rock Mining | Auswide Bank vs. Carawine Resources Limited | Auswide Bank vs. Sandon Capital Investments |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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