Correlation Between Nanosonics and Macquarie
Can any of the company-specific risk be diversified away by investing in both Nanosonics and Macquarie 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 Nanosonics and Macquarie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nanosonics and Macquarie Group, you can compare the effects of market volatilities on Nanosonics and Macquarie 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 Nanosonics with a short position of Macquarie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanosonics and Macquarie.
Diversification Opportunities for Nanosonics and Macquarie
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nanosonics and Macquarie is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nanosonics and Macquarie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Nanosonics 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 Nanosonics are associated (or correlated) with Macquarie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Nanosonics i.e., Nanosonics and Macquarie go up and down completely randomly.
Pair Corralation between Nanosonics and Macquarie
Assuming the 90 days trading horizon Nanosonics is expected to under-perform the Macquarie. In addition to that, Nanosonics is 2.5 times more volatile than Macquarie Group. It trades about -0.01 of its total potential returns per unit of risk. Macquarie Group is currently generating about 0.07 per unit of volatility. If you would invest 15,620 in Macquarie Group on September 14, 2024 and sell it today you would earn a total of 6,937 from holding Macquarie Group or generate 44.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Nanosonics vs. Macquarie Group
Performance |
| Timeline |
| Nanosonics |
| Macquarie Group |
Nanosonics and Macquarie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanosonics and Macquarie
The main advantage of trading using opposite Nanosonics and Macquarie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanosonics position performs unexpectedly, Macquarie 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 Macquarie will offset losses from the drop in Macquarie's long position.| Nanosonics vs. Vulcan Steel | Nanosonics vs. Mach7 Technologies | Nanosonics vs. Phoslock Environmental Technologies | Nanosonics vs. Environmental Clean Technologies |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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