Correlation Between Macquarie Group and Resmed
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Resmed 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 Resmed 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 Resmed Inc DRC, you can compare the effects of market volatilities on Macquarie Group and Resmed 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 Resmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Resmed.
Diversification Opportunities for Macquarie Group and Resmed
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Macquarie and Resmed is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Resmed Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resmed Inc DRC 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 Resmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resmed Inc DRC has no effect on the direction of Macquarie Group i.e., Macquarie Group and Resmed go up and down completely randomly.
Pair Corralation between Macquarie Group and Resmed
Assuming the 90 days trading horizon Macquarie Group Ltd is expected to under-perform the Resmed. But the preferred stock apears to be less risky and, when comparing its historical volatility, Macquarie Group Ltd is 4.19 times less risky than Resmed. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Resmed Inc DRC is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 3,697 in Resmed Inc DRC on November 2, 2024 and sell it today you would earn a total of 353.00 from holding Resmed Inc DRC or generate 9.55% 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. Resmed Inc DRC
Performance |
| Timeline |
| Macquarie Group |
| Resmed Inc DRC |
Macquarie Group and Resmed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and Resmed
The main advantage of trading using opposite Macquarie Group and Resmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, Resmed 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 Resmed will offset losses from the drop in Resmed's long position.| Macquarie Group vs. Charter Hall Education | Macquarie Group vs. Cleanaway Waste Management | Macquarie Group vs. Kkr Credit Income | Macquarie Group vs. Australian Agricultural |
| Resmed vs. Qbe Insurance Group | Resmed vs. Liberty Financial Group | Resmed vs. Bank of Queensland | Resmed vs. National Storage REIT |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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