Correlation Between Macquarie Bank and Spirit Telecom
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and Spirit Telecom 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 Spirit Telecom 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 Spirit Telecom, you can compare the effects of market volatilities on Macquarie Bank and Spirit Telecom 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 Spirit Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and Spirit Telecom.
Diversification Opportunities for Macquarie Bank and Spirit Telecom
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Macquarie and Spirit is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and Spirit Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Telecom 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 Spirit Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirit Telecom has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and Spirit Telecom go up and down completely randomly.
Pair Corralation between Macquarie Bank and Spirit Telecom
Assuming the 90 days trading horizon Macquarie Bank is expected to generate 6.25 times less return on investment than Spirit Telecom. But when comparing it to its historical volatility, Macquarie Bank Limited is 8.8 times less risky than Spirit Telecom. It trades about 0.09 of its potential returns per unit of risk. Spirit Telecom is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4.30 in Spirit Telecom on August 30, 2024 and sell it today you would earn a total of 1.20 from holding Spirit Telecom or generate 27.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Bank Limited vs. Spirit Telecom
Performance |
| Timeline |
| Macquarie Bank |
| Spirit Telecom |
Macquarie Bank and Spirit Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and Spirit Telecom
The main advantage of trading using opposite Macquarie Bank and Spirit Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, Spirit Telecom 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 Spirit Telecom will offset losses from the drop in Spirit Telecom's long position.| Macquarie Bank vs. Ssr Mining | Macquarie Bank vs. Ora Banda Mining | Macquarie Bank vs. Black Cat Syndicate | Macquarie Bank vs. Ecofibre |
| Spirit Telecom vs. Tlou Energy | Spirit Telecom vs. Encounter Resources | Spirit Telecom vs. Southern Cross Gold | Spirit Telecom vs. Minbos Resources |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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