Correlation Between Macquarie Bank and Catalyst Metals
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and Catalyst 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 Catalyst 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 Catalyst Metals, you can compare the effects of market volatilities on Macquarie Bank and Catalyst 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 Catalyst Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and Catalyst Metals.
Diversification Opportunities for Macquarie Bank and Catalyst Metals
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Macquarie and Catalyst is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and Catalyst Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst 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 Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and Catalyst Metals go up and down completely randomly.
Pair Corralation between Macquarie Bank and Catalyst Metals
Assuming the 90 days trading horizon Macquarie Bank Limited is expected to generate 0.09 times more return on investment than Catalyst Metals. However, Macquarie Bank Limited is 11.17 times less risky than Catalyst Metals. It trades about -0.09 of its potential returns per unit of risk. Catalyst Metals is currently generating about -0.09 per unit of risk. If you would invest 10,404 in Macquarie Bank Limited on August 29, 2024 and sell it today you would lose (140.00) from holding Macquarie Bank Limited or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Bank Limited vs. Catalyst Metals
Performance |
| Timeline |
| Macquarie Bank |
| Catalyst Metals |
Macquarie Bank and Catalyst Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and Catalyst Metals
The main advantage of trading using opposite Macquarie Bank and Catalyst Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, Catalyst 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 Catalyst Metals will offset losses from the drop in Catalyst Metals' long position.| Macquarie Bank vs. Richmond Vanadium Technology | Macquarie Bank vs. Navigator Global Investments | Macquarie Bank vs. Regal Investment | Macquarie Bank vs. Ainsworth Game Technology |
| Catalyst Metals vs. Regal Investment | Catalyst Metals vs. Pinnacle Investment Management | Catalyst Metals vs. Mayfield Childcare | Catalyst Metals vs. Champion Iron |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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