Correlation Between Rockwood Realisation and Macfarlane Group
Can any of the company-specific risk be diversified away by investing in both Rockwood Realisation and Macfarlane 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 Rockwood Realisation and Macfarlane Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockwood Realisation PLC and Macfarlane Group PLC, you can compare the effects of market volatilities on Rockwood Realisation and Macfarlane 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 Rockwood Realisation with a short position of Macfarlane Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwood Realisation and Macfarlane Group.
Diversification Opportunities for Rockwood Realisation and Macfarlane Group
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Rockwood and Macfarlane is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Rockwood Realisation PLC and Macfarlane Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macfarlane Group PLC and Rockwood Realisation 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 Rockwood Realisation PLC are associated (or correlated) with Macfarlane Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macfarlane Group PLC has no effect on the direction of Rockwood Realisation i.e., Rockwood Realisation and Macfarlane Group go up and down completely randomly.
Pair Corralation between Rockwood Realisation and Macfarlane Group
Assuming the 90 days trading horizon Rockwood Realisation PLC is expected to under-perform the Macfarlane Group. But the stock apears to be less risky and, when comparing its historical volatility, Rockwood Realisation PLC is 1.75 times less risky than Macfarlane Group. The stock trades about -0.04 of its potential returns per unit of risk. The Macfarlane Group PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 10,700 in Macfarlane Group PLC on November 28, 2024 and sell it today you would earn a total of 50.00 from holding Macfarlane Group PLC or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rockwood Realisation PLC vs. Macfarlane Group PLC
Performance |
| Timeline |
| Rockwood Realisation PLC |
| Macfarlane Group PLC |
Rockwood Realisation and Macfarlane Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rockwood Realisation and Macfarlane Group
The main advantage of trading using opposite Rockwood Realisation and Macfarlane Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockwood Realisation position performs unexpectedly, Macfarlane 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 Macfarlane Group will offset losses from the drop in Macfarlane Group's long position.| Rockwood Realisation vs. Take Two Interactive Software | Rockwood Realisation vs. Prosiebensat 1 Media | Rockwood Realisation vs. Aptitude Software Group | Rockwood Realisation vs. Live Nation Entertainment |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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