Correlation Between Macquarie and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both Macquarie and Australian Agricultural 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 and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group and Australian Agricultural, you can compare the effects of market volatilities on Macquarie and Australian Agricultural 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 with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie and Australian Agricultural.
Diversification Opportunities for Macquarie and Australian Agricultural
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Macquarie and Australian is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and Macquarie 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 are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Macquarie i.e., Macquarie and Australian Agricultural go up and down completely randomly.
Pair Corralation between Macquarie and Australian Agricultural
Assuming the 90 days trading horizon Macquarie Group is expected to generate 0.66 times more return on investment than Australian Agricultural. However, Macquarie Group is 1.51 times less risky than Australian Agricultural. It trades about 0.07 of its potential returns per unit of risk. Australian Agricultural is currently generating about -0.02 per unit of risk. If you would invest 15,620 in Macquarie Group on September 14, 2024 and sell it today you would earn a total of 6,937 from holding Macquarie Group or generate 44.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Group vs. Australian Agricultural
Performance |
| Timeline |
| Macquarie Group |
| Australian Agricultural |
Macquarie and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie and Australian Agricultural
The main advantage of trading using opposite Macquarie and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| Macquarie vs. Dalaroo Metals | Macquarie vs. Black Rock Mining | Macquarie vs. Stelar Metals | Macquarie vs. Fisher Paykel Healthcare |
| Australian Agricultural vs. Aneka Tambang Tbk | Australian Agricultural vs. Macquarie Group | Australian Agricultural vs. Macquarie Group Ltd | Australian Agricultural vs. Challenger |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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