Correlation Between Macquarie and Adairs
Can any of the company-specific risk be diversified away by investing in both Macquarie and Adairs 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 Adairs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group and Adairs, you can compare the effects of market volatilities on Macquarie and Adairs 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 Adairs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie and Adairs.
Diversification Opportunities for Macquarie and Adairs
Modest diversification
The 3 months correlation between Macquarie and Adairs is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Adairs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adairs 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 Adairs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adairs has no effect on the direction of Macquarie i.e., Macquarie and Adairs go up and down completely randomly.
Pair Corralation between Macquarie and Adairs
Assuming the 90 days trading horizon Macquarie is expected to generate 2.39 times less return on investment than Adairs. But when comparing it to its historical volatility, Macquarie Group is 2.69 times less risky than Adairs. It trades about 0.12 of its potential returns per unit of risk. Adairs is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 135.00 in Adairs on September 14, 2024 and sell it today you would earn a total of 138.00 from holding Adairs or generate 102.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Group vs. Adairs
Performance |
| Timeline |
| Macquarie Group |
| Adairs |
Macquarie and Adairs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie and Adairs
The main advantage of trading using opposite Macquarie and Adairs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie position performs unexpectedly, Adairs 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 Adairs will offset losses from the drop in Adairs' long position.| Macquarie vs. Dalaroo Metals | Macquarie vs. Black Rock Mining | Macquarie vs. Stelar Metals | Macquarie vs. Fisher Paykel Healthcare |
| Adairs vs. Aneka Tambang Tbk | Adairs vs. Macquarie Group | Adairs vs. Macquarie Group Ltd | Adairs 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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