Correlation Between Macquarie Group and Energy Resources
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Energy Resources 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 Energy Resources 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 Energy Resources, you can compare the effects of market volatilities on Macquarie Group and Energy Resources 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 Energy Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Energy Resources.
Diversification Opportunities for Macquarie Group and Energy Resources
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Macquarie and Energy is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Resources 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 Energy Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Resources has no effect on the direction of Macquarie Group i.e., Macquarie Group and Energy Resources go up and down completely randomly.
Pair Corralation between Macquarie Group and Energy Resources
Assuming the 90 days trading horizon Macquarie Group is expected to generate 152.9 times less return on investment than Energy Resources. But when comparing it to its historical volatility, Macquarie Group Ltd is 78.52 times less risky than Energy Resources. It trades about 0.06 of its potential returns per unit of risk. Energy Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.20 in Energy Resources on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Energy Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Group Ltd vs. Energy Resources
Performance |
| Timeline |
| Macquarie Group |
| Energy Resources |
Macquarie Group and Energy Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and Energy Resources
The main advantage of trading using opposite Macquarie Group and Energy Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, Energy Resources 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 Energy Resources will offset losses from the drop in Energy Resources' long position.| Macquarie Group vs. AMP | Macquarie Group vs. Regal Investment | Macquarie Group vs. REGAL ASIAN INVESTMENTS |
| Energy Resources vs. Data3 | Energy Resources vs. Mayfield Childcare | Energy Resources vs. Toys R Us | Energy Resources vs. Super Retail Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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