Correlation Between Stelar Metals and Macquarie
Can any of the company-specific risk be diversified away by investing in both Stelar Metals 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 Stelar Metals and Macquarie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stelar Metals and Macquarie Group, you can compare the effects of market volatilities on Stelar Metals 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 Stelar Metals with a short position of Macquarie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stelar Metals and Macquarie.
Diversification Opportunities for Stelar Metals and Macquarie
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stelar and Macquarie is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Stelar Metals and Macquarie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Stelar 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 Stelar Metals 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 Stelar Metals i.e., Stelar Metals and Macquarie go up and down completely randomly.
Pair Corralation between Stelar Metals and Macquarie
Assuming the 90 days trading horizon Stelar Metals is expected to generate 3.25 times less return on investment than Macquarie. In addition to that, Stelar Metals is 2.08 times more volatile than Macquarie Group. It trades about 0.04 of its total potential returns per unit of risk. Macquarie Group is currently generating about 0.25 per unit of volatility. If you would invest 21,975 in Macquarie Group on September 5, 2024 and sell it today you would earn a total of 1,388 from holding Macquarie Group or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Stelar Metals vs. Macquarie Group
Performance |
| Timeline |
| Stelar Metals |
| Macquarie Group |
Stelar Metals and Macquarie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stelar Metals and Macquarie
The main advantage of trading using opposite Stelar Metals and Macquarie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stelar Metals 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.| Stelar Metals vs. Northern Star Resources | Stelar Metals vs. Evolution Mining | Stelar Metals vs. Bluescope Steel | Stelar Metals vs. Sandfire Resources NL |
| Macquarie vs. Dug Technology | Macquarie vs. Qbe Insurance Group | Macquarie vs. BSP Financial Group | Macquarie vs. Magellan Financial Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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