Correlation Between Macquarie and Pro Medicus
Can any of the company-specific risk be diversified away by investing in both Macquarie and Pro Medicus 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 Pro Medicus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group and Pro Medicus, you can compare the effects of market volatilities on Macquarie and Pro Medicus 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 Pro Medicus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie and Pro Medicus.
Diversification Opportunities for Macquarie and Pro Medicus
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Macquarie and Pro is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Pro Medicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Medicus 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 Pro Medicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Medicus has no effect on the direction of Macquarie i.e., Macquarie and Pro Medicus go up and down completely randomly.
Pair Corralation between Macquarie and Pro Medicus
Assuming the 90 days trading horizon Macquarie is expected to generate 2.81 times less return on investment than Pro Medicus. But when comparing it to its historical volatility, Macquarie Group is 2.0 times less risky than Pro Medicus. It trades about 0.13 of its potential returns per unit of risk. Pro Medicus is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 8,790 in Pro Medicus on August 29, 2024 and sell it today you would earn a total of 14,210 from holding Pro Medicus or generate 161.66% 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. Pro Medicus
Performance |
| Timeline |
| Macquarie Group |
| Pro Medicus |
Macquarie and Pro Medicus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie and Pro Medicus
The main advantage of trading using opposite Macquarie and Pro Medicus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie position performs unexpectedly, Pro Medicus 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 Pro Medicus will offset losses from the drop in Pro Medicus' long position.| Macquarie vs. Charter Hall Retail | Macquarie vs. Centaurus Metals | Macquarie vs. Spirit Telecom | Macquarie vs. Perseus Mining |
| Pro Medicus vs. Westpac Banking | Pro Medicus vs. Champion Iron | Pro Medicus vs. Ridley | Pro Medicus vs. Peel Mining |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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