Correlation Between Macquarie Bank and Autosports
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and Autosports 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 Autosports 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 Autosports Group, you can compare the effects of market volatilities on Macquarie Bank and Autosports 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 Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and Autosports.
Diversification Opportunities for Macquarie Bank and Autosports
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Macquarie and Autosports is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group 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 Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and Autosports go up and down completely randomly.
Pair Corralation between Macquarie Bank and Autosports
Assuming the 90 days trading horizon Macquarie Bank Limited is expected to generate 0.51 times more return on investment than Autosports. However, Macquarie Bank Limited is 1.95 times less risky than Autosports. It trades about 0.03 of its potential returns per unit of risk. Autosports Group is currently generating about -0.48 per unit of risk. If you would invest 10,359 in Macquarie Bank Limited on September 3, 2024 and sell it today you would earn a total of 42.00 from holding Macquarie Bank Limited or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Bank Limited vs. Autosports Group
Performance |
| Timeline |
| Macquarie Bank |
| Autosports Group |
Macquarie Bank and Autosports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and Autosports
The main advantage of trading using opposite Macquarie Bank and Autosports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, Autosports 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 Autosports will offset losses from the drop in Autosports' long position.| Macquarie Bank vs. NEWMONT PORATION CDI | Macquarie Bank vs. Ora Banda Mining | Macquarie Bank vs. Polymetals Resources | Macquarie Bank vs. Champion Iron |
| Autosports vs. Westpac Banking | Autosports vs. Champion Iron | Autosports vs. iShares Global Healthcare | Autosports vs. Peel Mining |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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