Correlation Between Macquarie and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Macquarie and Southern Cross 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 Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group and Southern Cross Media, you can compare the effects of market volatilities on Macquarie and Southern Cross 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 Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie and Southern Cross.
Diversification Opportunities for Macquarie and Southern Cross
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Macquarie and Southern is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Southern Cross Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Media 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 Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Media has no effect on the direction of Macquarie i.e., Macquarie and Southern Cross go up and down completely randomly.
Pair Corralation between Macquarie and Southern Cross
Assuming the 90 days trading horizon Macquarie is expected to generate 4.04 times less return on investment than Southern Cross. But when comparing it to its historical volatility, Macquarie Group is 3.11 times less risky than Southern Cross. It trades about 0.08 of its potential returns per unit of risk. Southern Cross Media is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Southern Cross Media on October 11, 2024 and sell it today you would earn a total of 3.00 from holding Southern Cross Media or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Group vs. Southern Cross Media
Performance |
| Timeline |
| Macquarie Group |
| Southern Cross Media |
Macquarie and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie and Southern Cross
The main advantage of trading using opposite Macquarie and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie position performs unexpectedly, Southern Cross 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 Southern Cross will offset losses from the drop in Southern Cross' long position.| Macquarie vs. Vulcan Steel | Macquarie vs. Retail Food Group | Macquarie vs. Embark Education Group | Macquarie vs. Tombador Iron |
| Southern Cross vs. Aneka Tambang Tbk | Southern Cross vs. Commonwealth Bank | Southern Cross vs. Commonwealth Bank of | Southern Cross vs. Australia and New |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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