Correlation Between Macquarie and Black Cat
Can any of the company-specific risk be diversified away by investing in both Macquarie and Black Cat 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 Black Cat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group and Black Cat Syndicate, you can compare the effects of market volatilities on Macquarie and Black Cat 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 Black Cat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie and Black Cat.
Diversification Opportunities for Macquarie and Black Cat
Poor diversification
The 3 months correlation between Macquarie and Black is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Black Cat Syndicate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Cat Syndicate 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 Black Cat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Cat Syndicate has no effect on the direction of Macquarie i.e., Macquarie and Black Cat go up and down completely randomly.
Pair Corralation between Macquarie and Black Cat
Assuming the 90 days trading horizon Macquarie is expected to generate 7.56 times less return on investment than Black Cat. But when comparing it to its historical volatility, Macquarie Group is 3.48 times less risky than Black Cat. It trades about 0.04 of its potential returns per unit of risk. Black Cat Syndicate is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Black Cat Syndicate on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Black Cat Syndicate or generate 7.81% 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. Black Cat Syndicate
Performance |
| Timeline |
| Macquarie Group |
| Black Cat Syndicate |
Macquarie and Black Cat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie and Black Cat
The main advantage of trading using opposite Macquarie and Black Cat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie position performs unexpectedly, Black Cat 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 Black Cat will offset losses from the drop in Black Cat's long position.| Macquarie vs. Charter Hall Retail | Macquarie vs. Centaurus Metals | Macquarie vs. Spirit Telecom | Macquarie vs. Perseus Mining |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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