Correlation Between Macquarie Group and Microba Life
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Microba Life 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 Microba Life 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 Microba Life Sciences, you can compare the effects of market volatilities on Macquarie Group and Microba Life 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 Microba Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Microba Life.
Diversification Opportunities for Macquarie Group and Microba Life
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Macquarie and Microba is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Microba Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microba Life Sciences 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 Microba Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microba Life Sciences has no effect on the direction of Macquarie Group i.e., Macquarie Group and Microba Life go up and down completely randomly.
Pair Corralation between Macquarie Group and Microba Life
Assuming the 90 days trading horizon Macquarie Group is expected to generate 123.59 times less return on investment than Microba Life. But when comparing it to its historical volatility, Macquarie Group Ltd is 26.69 times less risky than Microba Life. It trades about 0.08 of its potential returns per unit of risk. Microba Life Sciences is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Microba Life Sciences on October 24, 2024 and sell it today you would earn a total of 9.00 from holding Microba Life Sciences or generate 47.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Group Ltd vs. Microba Life Sciences
Performance |
| Timeline |
| Macquarie Group |
| Microba Life Sciences |
Macquarie Group and Microba Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and Microba Life
The main advantage of trading using opposite Macquarie Group and Microba Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, Microba Life 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 Microba Life will offset losses from the drop in Microba Life's long position.| Macquarie Group vs. K2 Asset Management | Macquarie Group vs. Microequities Asset Management | Macquarie Group vs. Sonic Healthcare | Macquarie Group vs. Australian Strategic Materials |
| Microba Life vs. Alternative Investment Trust | Microba Life vs. Mach7 Technologies | Microba Life vs. Hudson Investment Group | Microba Life vs. Flagship Investments |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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