Correlation Between Macquarie Bank and MA Financial
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and MA 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 MA 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 MA Financial Group, you can compare the effects of market volatilities on Macquarie Bank and MA 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 MA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and MA Financial.
Diversification Opportunities for Macquarie Bank and MA Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Macquarie and MAF is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and MA Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MA Financial Group 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 MA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MA Financial Group has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and MA Financial go up and down completely randomly.
Pair Corralation between Macquarie Bank and MA Financial
Assuming the 90 days trading horizon Macquarie Bank Limited is expected to under-perform the MA Financial. But the stock apears to be less risky and, when comparing its historical volatility, Macquarie Bank Limited is 3.11 times less risky than MA Financial. The stock trades about -0.09 of its potential returns per unit of risk. The MA Financial Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 641.00 in MA Financial Group on August 29, 2024 and sell it today you would earn a total of 4.00 from holding MA Financial Group or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Bank Limited vs. MA Financial Group
Performance |
| Timeline |
| Macquarie Bank |
| MA Financial Group |
Macquarie Bank and MA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and MA Financial
The main advantage of trading using opposite Macquarie Bank and MA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, MA 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 MA Financial will offset losses from the drop in MA Financial's long position.| Macquarie Bank vs. Ssr Mining | Macquarie Bank vs. Ora Banda Mining | Macquarie Bank vs. Black Cat Syndicate | Macquarie Bank vs. Champion Iron |
| MA Financial vs. Champion Iron | MA Financial vs. Ridley | MA Financial vs. Peel Mining | MA Financial vs. Australian Dairy Farms |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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