Correlation Between Macquarie Bank and Finexia Financial
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and Finexia Financial 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 Finexia Financial 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 Finexia Financial Group, you can compare the effects of market volatilities on Macquarie Bank and Finexia Financial 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 Finexia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and Finexia Financial.
Diversification Opportunities for Macquarie Bank and Finexia Financial
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Macquarie and Finexia is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and Finexia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finexia Financial 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 Finexia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finexia Financial has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and Finexia Financial go up and down completely randomly.
Pair Corralation between Macquarie Bank and Finexia Financial
Assuming the 90 days trading horizon Macquarie Bank is expected to generate 3.36 times less return on investment than Finexia Financial. But when comparing it to its historical volatility, Macquarie Bank Limited is 9.99 times less risky than Finexia Financial. It trades about 0.06 of its potential returns per unit of risk. Finexia Financial Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 33.00 in Finexia Financial Group on August 31, 2024 and sell it today you would lose (1.00) from holding Finexia Financial Group or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Macquarie Bank Limited vs. Finexia Financial Group
Performance |
| Timeline |
| Macquarie Bank |
| Finexia Financial |
Macquarie Bank and Finexia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and Finexia Financial
The main advantage of trading using opposite Macquarie Bank and Finexia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, Finexia Financial 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 Finexia Financial will offset losses from the drop in Finexia Financial's long position.| Macquarie Bank vs. Ora Banda Mining | Macquarie Bank vs. Polymetals Resources | Macquarie Bank vs. Ecofibre | Macquarie Bank vs. iShares Global Healthcare |
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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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