Correlation Between Macquarie Bank and Collins Foods
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and Collins Foods 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 Collins Foods 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 Collins Foods, you can compare the effects of market volatilities on Macquarie Bank and Collins Foods 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 Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and Collins Foods.
Diversification Opportunities for Macquarie Bank and Collins Foods
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Macquarie and Collins is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods 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 Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and Collins Foods go up and down completely randomly.
Pair Corralation between Macquarie Bank and Collins Foods
Assuming the 90 days trading horizon Macquarie Bank Limited is expected to under-perform the Collins Foods. But the stock apears to be less risky and, when comparing its historical volatility, Macquarie Bank Limited is 4.41 times less risky than Collins Foods. The stock trades about -0.03 of its potential returns per unit of risk. The Collins Foods is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 727.00 in Collins Foods on November 7, 2024 and sell it today you would earn a total of 27.00 from holding Collins Foods or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Bank Limited vs. Collins Foods
Performance |
| Timeline |
| Macquarie Bank |
| Collins Foods |
Macquarie Bank and Collins Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and Collins Foods
The main advantage of trading using opposite Macquarie Bank and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.| Macquarie Bank vs. EVE Health Group | Macquarie Bank vs. Austco Healthcare | Macquarie Bank vs. Centrex Metals | Macquarie Bank vs. Regis Healthcare |
| Collins Foods vs. Aurelia Metals | Collins Foods vs. Home Consortium | Collins Foods vs. MetalsGrove Mining | Collins Foods vs. Sky Metals |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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