Correlation Between Macquarie Group and New World
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and New World 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 Group and New World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group Ltd and New World Development, you can compare the effects of market volatilities on Macquarie Group and New World 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 Group with a short position of New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and New World.
Diversification Opportunities for Macquarie Group and New World
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Macquarie and New is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and New World Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Development and Macquarie Group 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 Group Ltd are associated (or correlated) with New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Development has no effect on the direction of Macquarie Group i.e., Macquarie Group and New World go up and down completely randomly.
Pair Corralation between Macquarie Group and New World
Assuming the 90 days horizon Macquarie Group Ltd is expected to generate 0.17 times more return on investment than New World. However, Macquarie Group Ltd is 6.01 times less risky than New World. It trades about 0.02 of its potential returns per unit of risk. New World Development is currently generating about -0.03 per unit of risk. If you would invest 15,019 in Macquarie Group Ltd on October 26, 2024 and sell it today you would earn a total of 87.00 from holding Macquarie Group Ltd or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Group Ltd vs. New World Development
Performance |
| Timeline |
| Macquarie Group |
| New World Development |
Macquarie Group and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and New World
The main advantage of trading using opposite Macquarie Group and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.| Macquarie Group vs. Evercore Partners | Macquarie Group vs. PJT Partners | Macquarie Group vs. Lazard | Macquarie Group vs. Perella Weinberg Partners |
| New World vs. Mitsubishi Estate Co | New World vs. Macquarie Group Ltd | New World vs. Daiwa House Industry | New World vs. Aquagold International |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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