Correlation Between Macquarie Group and Step One
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Step One 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 Step One 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 Step One Clothing, you can compare the effects of market volatilities on Macquarie Group and Step One 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 Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Step One.
Diversification Opportunities for Macquarie Group and Step One
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Macquarie and Step is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing 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 Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Macquarie Group i.e., Macquarie Group and Step One go up and down completely randomly.
Pair Corralation between Macquarie Group and Step One
Assuming the 90 days trading horizon Macquarie Group is expected to generate 12.98 times less return on investment than Step One. But when comparing it to its historical volatility, Macquarie Group Ltd is 10.61 times less risky than Step One. It trades about 0.07 of its potential returns per unit of risk. Step One Clothing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 65.00 in Step One Clothing on August 25, 2024 and sell it today you would earn a total of 70.00 from holding Step One Clothing or generate 107.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Group Ltd vs. Step One Clothing
Performance |
| Timeline |
| Macquarie Group |
| Step One Clothing |
Macquarie Group and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and Step One
The main advantage of trading using opposite Macquarie Group and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.| Macquarie Group vs. Eagle Mountain Mining | Macquarie Group vs. Centuria Industrial Reit | Macquarie Group vs. Sky Metals | Macquarie Group vs. Strickland Metals |
| Step One vs. Macquarie Group | Step One vs. Macquarie Group Ltd | Step One vs. Commonwealth Bank | Step One vs. Rio Tinto |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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