Correlation Between Macquarie Bank and American West
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and American West 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 American West 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 American West Metals, you can compare the effects of market volatilities on Macquarie Bank and American West 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 American West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and American West.
Diversification Opportunities for Macquarie Bank and American West
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Macquarie and American is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and American West Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American West 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 American West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American West Metals has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and American West go up and down completely randomly.
Pair Corralation between Macquarie Bank and American West
Assuming the 90 days trading horizon Macquarie Bank Limited is expected to generate 0.09 times more return on investment than American West. However, Macquarie Bank Limited is 11.59 times less risky than American West. It trades about 0.09 of its potential returns per unit of risk. American West Metals is currently generating about -0.11 per unit of risk. If you would invest 9,847 in Macquarie Bank Limited on August 31, 2024 and sell it today you would earn a total of 554.00 from holding Macquarie Bank Limited or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Bank Limited vs. American West Metals
Performance |
| Timeline |
| Macquarie Bank |
| American West Metals |
Macquarie Bank and American West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and American West
The main advantage of trading using opposite Macquarie Bank and American West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, American West 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 American West will offset losses from the drop in American West's long position.| Macquarie Bank vs. Ora Banda Mining | Macquarie Bank vs. Polymetals Resources | Macquarie Bank vs. Ecofibre | Macquarie Bank vs. iShares Global Healthcare |
| American West vs. Toys R Us | American West vs. Argo Investments | American West vs. K2 Asset Management | American West vs. Alternative Investment Trust |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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