Correlation Between Macquarie Group and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Insurance Australia 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 Insurance Australia 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 Insurance Australia Group, you can compare the effects of market volatilities on Macquarie Group and Insurance Australia 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 Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Insurance Australia.
Diversification Opportunities for Macquarie Group and Insurance Australia
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Macquarie and Insurance is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia 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 Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of Macquarie Group i.e., Macquarie Group and Insurance Australia go up and down completely randomly.
Pair Corralation between Macquarie Group and Insurance Australia
Assuming the 90 days trading horizon Macquarie Group is expected to generate 58.53 times less return on investment than Insurance Australia. But when comparing it to its historical volatility, Macquarie Group Ltd is 5.06 times less risky than Insurance Australia. It trades about 0.03 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 854.00 in Insurance Australia Group on November 3, 2024 and sell it today you would earn a total of 66.00 from holding Insurance Australia Group or generate 7.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Group Ltd vs. Insurance Australia Group
Performance |
| Timeline |
| Macquarie Group |
| Insurance Australia |
Macquarie Group and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and Insurance Australia
The main advantage of trading using opposite Macquarie Group and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, Insurance Australia 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 Insurance Australia will offset losses from the drop in Insurance Australia's long position.| Macquarie Group vs. Spirit Telecom | Macquarie Group vs. Data3 | Macquarie Group vs. Saferoads Holdings | Macquarie Group vs. Retail Food Group |
| Insurance Australia vs. Microequities Asset Management | Insurance Australia vs. Sports Entertainment Group | Insurance Australia vs. The Environmental Group | Insurance Australia vs. Australian Unity Office |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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