Correlation Between Macquarie Group and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Sonic Healthcare 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 Sonic Healthcare 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 Sonic Healthcare, you can compare the effects of market volatilities on Macquarie Group and Sonic Healthcare 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 Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Sonic Healthcare.
Diversification Opportunities for Macquarie Group and Sonic Healthcare
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Macquarie and Sonic is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Sonic Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare 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 Sonic Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonic Healthcare has no effect on the direction of Macquarie Group i.e., Macquarie Group and Sonic Healthcare go up and down completely randomly.
Pair Corralation between Macquarie Group and Sonic Healthcare
Assuming the 90 days trading horizon Macquarie Group is expected to generate 15.09 times less return on investment than Sonic Healthcare. But when comparing it to its historical volatility, Macquarie Group Ltd is 3.34 times less risky than Sonic Healthcare. It trades about 0.03 of its potential returns per unit of risk. Sonic Healthcare is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,669 in Sonic Healthcare on September 13, 2024 and sell it today you would earn a total of 159.00 from holding Sonic Healthcare or generate 5.96% 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. Sonic Healthcare
Performance |
| Timeline |
| Macquarie Group |
| Sonic Healthcare |
Macquarie Group and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and Sonic Healthcare
The main advantage of trading using opposite Macquarie Group and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, Sonic Healthcare 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 Sonic Healthcare will offset losses from the drop in Sonic Healthcare's long position.| Macquarie Group vs. MA Financial Group | Macquarie Group vs. Kkr Credit Income | Macquarie Group vs. ABACUS STORAGE KING | Macquarie Group vs. Bell Financial Group |
| Sonic Healthcare vs. Aeris Environmental | Sonic Healthcare vs. Retail Food Group | Sonic Healthcare vs. Farm Pride Foods | Sonic Healthcare vs. Falcon Metals |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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