Correlation Between Macquarie Group and Aussie Broadband
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Aussie Broadband 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 Group and Aussie Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group Ltd and Aussie Broadband, you can compare the effects of market volatilities on Macquarie Group and Aussie Broadband 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 Group with a short position of Aussie Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Aussie Broadband.
Diversification Opportunities for Macquarie Group and Aussie Broadband
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Macquarie and Aussie is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Aussie Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aussie Broadband and Macquarie Group 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 Ltd are associated (or correlated) with Aussie Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aussie Broadband has no effect on the direction of Macquarie Group i.e., Macquarie Group and Aussie Broadband go up and down completely randomly.
Pair Corralation between Macquarie Group and Aussie Broadband
Assuming the 90 days trading horizon Macquarie Group Ltd is expected to generate 0.28 times more return on investment than Aussie Broadband. However, Macquarie Group Ltd is 3.52 times less risky than Aussie Broadband. It trades about 0.04 of its potential returns per unit of risk. Aussie Broadband is currently generating about -0.01 per unit of risk. If you would invest 10,375 in Macquarie Group Ltd on September 12, 2024 and sell it today you would earn a total of 44.00 from holding Macquarie Group Ltd or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Group Ltd vs. Aussie Broadband
Performance |
| Timeline |
| Macquarie Group |
| Aussie Broadband |
Macquarie Group and Aussie Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and Aussie Broadband
The main advantage of trading using opposite Macquarie Group and Aussie Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, Aussie Broadband 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 Aussie Broadband will offset losses from the drop in Aussie Broadband's long position.| Macquarie Group vs. Land Homes Group | Macquarie Group vs. WiseTech Global Limited | Macquarie Group vs. Ras Technology Holdings | Macquarie Group vs. Neurotech International |
| Aussie Broadband vs. Regis Healthcare | Aussie Broadband vs. Global Health | Aussie Broadband vs. Capitol Health | Aussie Broadband 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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