Correlation Between CHARLES SCHWAB and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both CHARLES SCHWAB 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 CHARLES SCHWAB and Macquarie Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHARLES SCHWAB DEPPRFJ and Macquarie Group Limited, you can compare the effects of market volatilities on CHARLES SCHWAB 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 CHARLES SCHWAB with a short position of Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHARLES SCHWAB and Macquarie Group.
Diversification Opportunities for CHARLES SCHWAB and Macquarie Group
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHARLES and Macquarie is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CHARLES SCHWAB DEPPRFJ and Macquarie Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and CHARLES SCHWAB 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 CHARLES SCHWAB DEPPRFJ 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 CHARLES SCHWAB i.e., CHARLES SCHWAB and Macquarie Group go up and down completely randomly.
Pair Corralation between CHARLES SCHWAB and Macquarie Group
Assuming the 90 days trading horizon CHARLES SCHWAB is expected to generate 1.27 times less return on investment than Macquarie Group. In addition to that, CHARLES SCHWAB is 1.83 times more volatile than Macquarie Group Limited. It trades about 0.05 of its total potential returns per unit of risk. Macquarie Group Limited is currently generating about 0.12 per unit of volatility. If you would invest 11,404 in Macquarie Group Limited on August 29, 2024 and sell it today you would earn a total of 2,828 from holding Macquarie Group Limited or generate 24.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHARLES SCHWAB DEPPRFJ vs. Macquarie Group Limited
Performance |
| Timeline |
| CHARLES SCHWAB DEPPRFJ |
| Macquarie Group |
CHARLES SCHWAB and Macquarie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHARLES SCHWAB and Macquarie Group
The main advantage of trading using opposite CHARLES SCHWAB and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHARLES SCHWAB 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.| CHARLES SCHWAB vs. Macquarie Group Limited | CHARLES SCHWAB vs. MSCI Inc | CHARLES SCHWAB vs. Superior Plus Corp | CHARLES SCHWAB vs. NMI Holdings |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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