Correlation Between Macquarie Bank and Sky Metals
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and Sky 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 Sky 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 Sky Metals, you can compare the effects of market volatilities on Macquarie Bank and Sky 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 Sky Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and Sky Metals.
Diversification Opportunities for Macquarie Bank and Sky Metals
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Macquarie and Sky is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and Sky Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sky 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 Sky Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sky Metals has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and Sky Metals go up and down completely randomly.
Pair Corralation between Macquarie Bank and Sky Metals
Assuming the 90 days trading horizon Macquarie Bank Limited is expected to generate 0.17 times more return on investment than Sky Metals. However, Macquarie Bank Limited is 5.79 times less risky than Sky Metals. It trades about 0.02 of its potential returns per unit of risk. Sky Metals is currently generating about -0.05 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Bank Limited vs. Sky Metals
Performance |
| Timeline |
| Macquarie Bank |
| Sky Metals |
Macquarie Bank and Sky Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and Sky Metals
The main advantage of trading using opposite Macquarie Bank and Sky Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, Sky 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 Sky Metals will offset losses from the drop in Sky Metals' 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 |
| Sky Metals vs. Carnegie Clean Energy | Sky Metals vs. Nufarm Finance NZ | Sky Metals vs. Richmond Vanadium Technology | Sky Metals vs. Macquarie Technology Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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