Correlation Between Macquarie Bank and Energy Resources
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and Energy Resources 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 Energy Resources 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 Energy Resources, you can compare the effects of market volatilities on Macquarie Bank and Energy Resources 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 Energy Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and Energy Resources.
Diversification Opportunities for Macquarie Bank and Energy Resources
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Macquarie and Energy is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Resources 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 Energy Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Resources has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and Energy Resources go up and down completely randomly.
Pair Corralation between Macquarie Bank and Energy Resources
Assuming the 90 days trading horizon Macquarie Bank Limited is expected to generate 0.02 times more return on investment than Energy Resources. However, Macquarie Bank Limited is 43.0 times less risky than Energy Resources. It trades about 0.07 of its potential returns per unit of risk. Energy Resources is currently generating about 0.0 per unit of risk. If you would invest 9,937 in Macquarie Bank Limited on September 3, 2024 and sell it today you would earn a total of 464.00 from holding Macquarie Bank Limited or generate 4.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Bank Limited vs. Energy Resources
Performance |
| Timeline |
| Macquarie Bank |
| Energy Resources |
Macquarie Bank and Energy Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and Energy Resources
The main advantage of trading using opposite Macquarie Bank and Energy Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, Energy Resources 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 Energy Resources will offset losses from the drop in Energy Resources' long position.| Macquarie Bank vs. NEWMONT PORATION CDI | Macquarie Bank vs. Ora Banda Mining | Macquarie Bank vs. Polymetals Resources | Macquarie Bank vs. Champion Iron |
| Energy Resources vs. Macquarie Bank Limited | Energy Resources vs. National Australia Bank | Energy Resources vs. Retail Food Group | Energy Resources vs. G8 Education |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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