Correlation Between Macquarie Bank and Suncorp
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and Suncorp 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 Suncorp 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 Suncorp Group, you can compare the effects of market volatilities on Macquarie Bank and Suncorp 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 Suncorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and Suncorp.
Diversification Opportunities for Macquarie Bank and Suncorp
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Macquarie and Suncorp is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and Suncorp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncorp 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 Suncorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncorp Group has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and Suncorp go up and down completely randomly.
Pair Corralation between Macquarie Bank and Suncorp
Assuming the 90 days trading horizon Macquarie Bank is expected to generate 35.26 times less return on investment than Suncorp. But when comparing it to its historical volatility, Macquarie Bank Limited is 1.77 times less risky than Suncorp. It trades about 0.02 of its potential returns per unit of risk. Suncorp Group is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,792 in Suncorp Group on September 1, 2024 and sell it today you would earn a total of 178.00 from holding Suncorp Group or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Macquarie Bank Limited vs. Suncorp Group
Performance |
| Timeline |
| Macquarie Bank |
| Suncorp Group |
Macquarie Bank and Suncorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and Suncorp
The main advantage of trading using opposite Macquarie Bank and Suncorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank position performs unexpectedly, Suncorp 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 Suncorp will offset losses from the drop in Suncorp'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 |
| Suncorp vs. EP Financial Group | Suncorp vs. Super Retail Group | Suncorp vs. Macquarie Bank Limited | Suncorp vs. Kkr Credit Income |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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