Correlation Between Macquarie Group and Readytech Holdings
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Readytech Holdings 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 Readytech Holdings 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 Readytech Holdings, you can compare the effects of market volatilities on Macquarie Group and Readytech Holdings 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 Readytech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Readytech Holdings.
Diversification Opportunities for Macquarie Group and Readytech Holdings
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Macquarie and Readytech is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Readytech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Readytech Holdings 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 Readytech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Readytech Holdings has no effect on the direction of Macquarie Group i.e., Macquarie Group and Readytech Holdings go up and down completely randomly.
Pair Corralation between Macquarie Group and Readytech Holdings
Assuming the 90 days trading horizon Macquarie Group Ltd is expected to generate 0.19 times more return on investment than Readytech Holdings. However, Macquarie Group Ltd is 5.15 times less risky than Readytech Holdings. It trades about 0.08 of its potential returns per unit of risk. Readytech Holdings is currently generating about -0.01 per unit of risk. If you would invest 8,921 in Macquarie Group Ltd on December 12, 2024 and sell it today you would earn a total of 1,374 from holding Macquarie Group Ltd or generate 15.4% 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. Readytech Holdings
Performance |
| Timeline |
| Macquarie Group |
| Readytech Holdings |
Macquarie Group and Readytech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and Readytech Holdings
The main advantage of trading using opposite Macquarie Group and Readytech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, Readytech Holdings 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 Readytech Holdings will offset losses from the drop in Readytech Holdings' long position.| Macquarie Group vs. MFF Capital 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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