Correlation Between Macquarie and Light Wonder
Can any of the company-specific risk be diversified away by investing in both Macquarie and Light Wonder 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 Light Wonder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group and Light Wonder, you can compare the effects of market volatilities on Macquarie and Light Wonder 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 Light Wonder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie and Light Wonder.
Diversification Opportunities for Macquarie and Light Wonder
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Macquarie and Light is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Light Wonder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Wonder 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 Light Wonder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Wonder has no effect on the direction of Macquarie i.e., Macquarie and Light Wonder go up and down completely randomly.
Pair Corralation between Macquarie and Light Wonder
Assuming the 90 days trading horizon Macquarie is expected to generate 1.89 times less return on investment than Light Wonder. But when comparing it to its historical volatility, Macquarie Group is 1.78 times less risky than Light Wonder. It trades about 0.07 of its potential returns per unit of risk. Light Wonder is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,100 in Light Wonder on August 28, 2024 and sell it today you would earn a total of 5,599 from holding Light Wonder or generate 61.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 76.91% |
| Values | Daily Returns |
Macquarie Group vs. Light Wonder
Performance |
| Timeline |
| Macquarie Group |
| Light Wonder |
Macquarie and Light Wonder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie and Light Wonder
The main advantage of trading using opposite Macquarie and Light Wonder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie position performs unexpectedly, Light Wonder 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 Light Wonder will offset losses from the drop in Light Wonder's long position.| Macquarie vs. Vulcan Steel | Macquarie vs. Charter Hall Education | Macquarie vs. Queste Communications | Macquarie vs. Dicker Data |
| Light Wonder vs. Lottery | Light Wonder vs. Pointsbet Holdings | Light Wonder vs. Bluebet Holdings | Light Wonder vs. Betmakers Technology Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |