Correlation Between Macquarie Group and Air New
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Air New 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 Air New 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 Air New Zealand, you can compare the effects of market volatilities on Macquarie Group and Air New 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 Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Air New.
Diversification Opportunities for Macquarie Group and Air New
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Macquarie and Air is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Macquarie Group i.e., Macquarie Group and Air New go up and down completely randomly.
Pair Corralation between Macquarie Group and Air New
Assuming the 90 days trading horizon Macquarie Group is expected to generate 4.29 times less return on investment than Air New. But when comparing it to its historical volatility, Macquarie Group Ltd is 2.87 times less risky than Air New. It trades about 0.21 of its potential returns per unit of risk. Air New Zealand is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 47.00 in Air New Zealand on August 31, 2024 and sell it today you would earn a total of 4.00 from holding Air New Zealand or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Macquarie Group Ltd vs. Air New Zealand
Performance |
| Timeline |
| Macquarie Group |
| Air New Zealand |
Macquarie Group and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and Air New
The main advantage of trading using opposite Macquarie Group and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New's long position.| Macquarie Group vs. Platinum Asset Management | Macquarie Group vs. Dexus Convenience Retail | Macquarie Group vs. Clime Investment Management | Macquarie Group vs. Queste Communications |
| Air New vs. Aristocrat Leisure | Air New vs. MFF Capital Investments | Air New vs. Andean Silver Limited | Air New vs. Kingsrose 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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