Correlation Between Macquarie Group and FLOW TRADERS

Can any of the company-specific risk be diversified away by investing in both Macquarie Group and FLOW TRADERS 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 Macquarie Group and FLOW TRADERS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Macquarie Group Limited and FLOW TRADERS LTD, you can compare the effects of market volatilities on Macquarie Group and FLOW TRADERS 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 Macquarie Group with a short position of FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and FLOW TRADERS.

Diversification Opportunities for Macquarie Group and FLOW TRADERS

-0.43

Correlation Coefficient

Macquarie Group  FLOW TRADERS

Very good diversification

The 3 months correlation between Macquarie and FLOW is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Limited and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD and Macquarie Group 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 Macquarie Group Limited are associated (or correlated) with FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of Macquarie Group i.e., Macquarie Group and FLOW TRADERS go up and down completely randomly.

Pair Corralation between Macquarie Group and FLOW TRADERS

Assuming the 90 days horizon Macquarie Group Limited is expected to under-perform the FLOW TRADERS. But the stock apears to be less risky and, when comparing its historical volatility, Macquarie Group Limited is 1.32 times less risky than FLOW TRADERS. The stock trades about -0.13 of its potential returns per unit of risk. The FLOW TRADERS LTD is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,164  in FLOW TRADERS LTD on December 22, 2024 and sell it today you would earn a total of  532.00  from holding FLOW TRADERS LTD or generate 24.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Macquarie Group Limited  vs.  FLOW TRADERS LTD

Macquarie Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Macquarie Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

FLOW TRADERS LTD

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FLOW TRADERS LTD are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FLOW TRADERS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macquarie Group and FLOW TRADERS

The main advantage of trading using opposite Macquarie Group and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS's long position.

The idea behind Macquarie Group Limited and FLOW TRADERS LTD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.