Correlation Between Macquarie Bank and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and Aurelia Metals 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 Aurelia Metals 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 Aurelia Metals, you can compare the effects of market volatilities on Macquarie Bank and Aurelia Metals 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 Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and Aurelia Metals.
Diversification Opportunities for Macquarie Bank and Aurelia Metals
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Macquarie and Aurelia is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals 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 Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and Aurelia Metals go up and down completely randomly.
Pair Corralation between Macquarie Bank and Aurelia Metals
Assuming the 90 days trading horizon Macquarie Bank is expected to generate 91.16 times less return on investment than Aurelia Metals. But when comparing it to its historical volatility, Macquarie Bank Limited is 17.08 times less risky than Aurelia Metals. It trades about 0.02 of its potential returns per unit of risk. Aurelia Metals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Aurelia Metals on December 11, 2024 and sell it today you would earn a total of 3.00 from holding Aurelia Metals or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Bank Limited vs. Aurelia Metals
Performance |
| Timeline |
| Macquarie Bank |
| Aurelia Metals |
Macquarie Bank and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and Aurelia Metals
The main advantage of trading using opposite Macquarie Bank and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, Aurelia Metals 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 Aurelia Metals will offset losses from the drop in Aurelia Metals' long position.| Macquarie Bank vs. Aurelia Metals | Macquarie Bank vs. Saferoads Holdings | Macquarie Bank vs. Lendlease Group | Macquarie Bank vs. Gold Road Resources |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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