Correlation Between Sky Metals and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both Sky Metals 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 Sky Metals and Macquarie Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and Macquarie Group Ltd, you can compare the effects of market volatilities on Sky Metals 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 Sky Metals with a short position of Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and Macquarie Group.
Diversification Opportunities for Sky Metals and Macquarie Group
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sky and Macquarie is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Sky Metals 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 Sky Metals 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 Sky Metals i.e., Sky Metals and Macquarie Group go up and down completely randomly.
Pair Corralation between Sky Metals and Macquarie Group
Assuming the 90 days trading horizon Sky Metals is expected to generate 13.2 times more return on investment than Macquarie Group. However, Sky Metals is 13.2 times more volatile than Macquarie Group Ltd. It trades about 0.03 of its potential returns per unit of risk. Macquarie Group Ltd is currently generating about 0.06 per unit of risk. If you would invest 5.00 in Sky Metals on August 29, 2024 and sell it today you would earn a total of 0.30 from holding Sky Metals or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.79% |
| Values | Daily Returns |
Sky Metals vs. Macquarie Group Ltd
Performance |
| Timeline |
| Sky Metals |
| Macquarie Group |
Sky Metals and Macquarie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Metals and Macquarie Group
The main advantage of trading using opposite Sky Metals and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals 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.| Sky Metals vs. Northern Star Resources | Sky Metals vs. Evolution Mining | Sky Metals vs. Bluescope Steel | Sky Metals vs. Sandfire Resources NL |
| Macquarie Group vs. AMP | Macquarie Group vs. Regal Investment | Macquarie Group vs. REGAL ASIAN INVESTMENTS |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |