Correlation Between Macquarie and Woolworths
Can any of the company-specific risk be diversified away by investing in both Macquarie and Woolworths 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 Woolworths into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group and Woolworths, you can compare the effects of market volatilities on Macquarie and Woolworths 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 Woolworths. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie and Woolworths.
Diversification Opportunities for Macquarie and Woolworths
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Macquarie and Woolworths is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Woolworths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths 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 Woolworths. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths has no effect on the direction of Macquarie i.e., Macquarie and Woolworths go up and down completely randomly.
Pair Corralation between Macquarie and Woolworths
Assuming the 90 days trading horizon Macquarie Group is expected to generate 1.02 times more return on investment than Woolworths. However, Macquarie is 1.02 times more volatile than Woolworths. It trades about 0.13 of its potential returns per unit of risk. Woolworths is currently generating about -0.05 per unit of risk. If you would invest 16,321 in Macquarie Group on September 2, 2024 and sell it today you would earn a total of 6,790 from holding Macquarie Group or generate 41.6% 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. Woolworths
Performance |
| Timeline |
| Macquarie Group |
| Woolworths |
Macquarie and Woolworths Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie and Woolworths
The main advantage of trading using opposite Macquarie and Woolworths positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie position performs unexpectedly, Woolworths 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 Woolworths will offset losses from the drop in Woolworths' long position.| Macquarie vs. Aneka Tambang Tbk | Macquarie vs. Macquarie Group Ltd | Macquarie vs. Challenger | Macquarie vs. BHP Group Limited |
| Woolworths vs. Skycity Entertainment Group | Woolworths vs. Charter Hall Retail | Woolworths vs. oOhMedia | Woolworths vs. Phoslock Environmental Technologies |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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