Correlation Between Macquarie and Aussie Broadband
Can any of the company-specific risk be diversified away by investing in both Macquarie and Aussie Broadband 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 Aussie Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group and Aussie Broadband, you can compare the effects of market volatilities on Macquarie and Aussie Broadband 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 Aussie Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie and Aussie Broadband.
Diversification Opportunities for Macquarie and Aussie Broadband
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Macquarie and Aussie is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Aussie Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aussie Broadband 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 Aussie Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aussie Broadband has no effect on the direction of Macquarie i.e., Macquarie and Aussie Broadband go up and down completely randomly.
Pair Corralation between Macquarie and Aussie Broadband
Assuming the 90 days trading horizon Macquarie Group is expected to generate 0.73 times more return on investment than Aussie Broadband. However, Macquarie Group is 1.38 times less risky than Aussie Broadband. It trades about 0.02 of its potential returns per unit of risk. Aussie Broadband is currently generating about -0.16 per unit of risk. If you would invest 23,065 in Macquarie Group on August 25, 2024 and sell it today you would earn a total of 92.00 from holding Macquarie Group or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Group vs. Aussie Broadband
Performance |
| Timeline |
| Macquarie Group |
| Aussie Broadband |
Macquarie and Aussie Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie and Aussie Broadband
The main advantage of trading using opposite Macquarie and Aussie Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie position performs unexpectedly, Aussie Broadband 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 Aussie Broadband will offset losses from the drop in Aussie Broadband's long position.| Macquarie vs. Argo Investments | Macquarie vs. REGAL ASIAN INVESTMENTS | Macquarie vs. Platinum Asia Investments | Macquarie vs. COAST ENTERTAINMENT HOLDINGS |
| Aussie Broadband vs. Alto Metals | Aussie Broadband vs. Sky Metals | Aussie Broadband vs. Alternative Investment Trust | Aussie Broadband vs. Sandon Capital Investments |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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