Correlation Between Macquarie Group and Australian Unity
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Australian Unity 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 Australian Unity 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 Australian Unity Office, you can compare the effects of market volatilities on Macquarie Group and Australian Unity 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 Australian Unity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Australian Unity.
Diversification Opportunities for Macquarie Group and Australian Unity
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Macquarie and Australian is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Australian Unity Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity Office 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 Australian Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity Office has no effect on the direction of Macquarie Group i.e., Macquarie Group and Australian Unity go up and down completely randomly.
Pair Corralation between Macquarie Group and Australian Unity
Assuming the 90 days trading horizon Macquarie Group Ltd is expected to generate 0.28 times more return on investment than Australian Unity. However, Macquarie Group Ltd is 3.56 times less risky than Australian Unity. It trades about 0.07 of its potential returns per unit of risk. Australian Unity Office is currently generating about -0.2 per unit of risk. If you would invest 10,503 in Macquarie Group Ltd on August 28, 2024 and sell it today you would earn a total of 50.00 from holding Macquarie Group Ltd or generate 0.48% 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. Australian Unity Office
Performance |
| Timeline |
| Macquarie Group |
| Australian Unity Office |
Macquarie Group and Australian Unity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and Australian Unity
The main advantage of trading using opposite Macquarie Group and Australian Unity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, Australian Unity 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 Australian Unity will offset losses from the drop in Australian Unity's long position.| Macquarie Group vs. AMP | Macquarie Group vs. Regal Investment | Macquarie Group vs. REGAL ASIAN INVESTMENTS |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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