Correlation Between Premier Investments and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both Premier Investments and Macquarie Group 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 Premier Investments and Macquarie Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Investments and Macquarie Group Ltd, you can compare the effects of market volatilities on Premier Investments and Macquarie Group 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 Premier Investments with a short position of Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Investments and Macquarie Group.
Diversification Opportunities for Premier Investments and Macquarie Group
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Premier and Macquarie is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Premier Investments and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Premier Investments 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 Premier Investments are associated (or correlated) with Macquarie Group. 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 Premier Investments i.e., Premier Investments and Macquarie Group go up and down completely randomly.
Pair Corralation between Premier Investments and Macquarie Group
Assuming the 90 days trading horizon Premier Investments is expected to generate 3.23 times more return on investment than Macquarie Group. However, Premier Investments is 3.23 times more volatile than Macquarie Group Ltd. It trades about 0.09 of its potential returns per unit of risk. Macquarie Group Ltd is currently generating about 0.27 per unit of risk. If you would invest 3,375 in Premier Investments on September 1, 2024 and sell it today you would earn a total of 94.00 from holding Premier Investments or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Premier Investments vs. Macquarie Group Ltd
Performance |
| Timeline |
| Premier Investments |
| Macquarie Group |
Premier Investments and Macquarie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Investments and Macquarie Group
The main advantage of trading using opposite Premier Investments and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Investments position performs unexpectedly, Macquarie Group 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 Group will offset losses from the drop in Macquarie Group's long position.| Premier Investments vs. Aneka Tambang Tbk | Premier Investments vs. BHP Group Limited | Premier Investments vs. Rio Tinto | Premier Investments vs. Macquarie Group Ltd |
| Macquarie Group vs. Premier Investments | Macquarie Group vs. Carlton Investments | Macquarie Group vs. Retail Food Group | Macquarie Group vs. Carnegie Clean Energy |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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