Correlation Between Macquarie Bank and Hawsons Iron
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and Hawsons Iron 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 Hawsons Iron 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 Hawsons Iron, you can compare the effects of market volatilities on Macquarie Bank and Hawsons Iron 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 Hawsons Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and Hawsons Iron.
Diversification Opportunities for Macquarie Bank and Hawsons Iron
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Macquarie and Hawsons is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and Hawsons Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawsons Iron 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 Hawsons Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawsons Iron has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and Hawsons Iron go up and down completely randomly.
Pair Corralation between Macquarie Bank and Hawsons Iron
Assuming the 90 days trading horizon Macquarie Bank Limited is expected to generate 0.14 times more return on investment than Hawsons Iron. However, Macquarie Bank Limited is 7.06 times less risky than Hawsons Iron. It trades about 0.02 of its potential returns per unit of risk. Hawsons Iron is currently generating about -0.02 per unit of risk. If you would invest 10,379 in Macquarie Bank Limited on September 1, 2024 and sell it today you would earn a total of 22.00 from holding Macquarie Bank Limited or generate 0.21% 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. Hawsons Iron
Performance |
| Timeline |
| Macquarie Bank |
| Hawsons Iron |
Macquarie Bank and Hawsons Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and Hawsons Iron
The main advantage of trading using opposite Macquarie Bank and Hawsons Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, Hawsons Iron 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 Hawsons Iron will offset losses from the drop in Hawsons Iron's long position.| Macquarie Bank vs. NEWMONT PORATION CDI | Macquarie Bank vs. Ssr Mining | Macquarie Bank vs. Ora Banda Mining | Macquarie Bank vs. Black Cat Syndicate |
| Hawsons Iron vs. Northern Star Resources | Hawsons Iron vs. Evolution Mining | Hawsons Iron vs. Bluescope Steel | Hawsons Iron vs. Sandfire Resources NL |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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