Correlation Between High Yield and Macquarie Group

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

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

Diversification Opportunities for High Yield and Macquarie Group

0.53

Correlation Coefficient

High Yield  Macquarie Group

Very weak diversification

The 3 months correlation between High and Macquarie is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and High Yield 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 High Yield Municipal Fund 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 High Yield i.e., High Yield and Macquarie Group go up and down completely randomly.

Pair Corralation between High Yield and Macquarie Group

Assuming the 90 days horizon High Yield Municipal Fund is expected to generate 0.24 times more return on investment than Macquarie Group. However, High Yield Municipal Fund is 4.11 times less risky than Macquarie Group. It trades about -0.35 of its potential returns per unit of risk. Macquarie Group Ltd is currently generating about -0.26 per unit of risk. If you would invest  905.00  in High Yield Municipal Fund on October 10, 2024 and sell it today you would lose (18.00) from holding High Yield Municipal Fund or give up 1.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

High Yield Municipal Fund  vs.  Macquarie Group Ltd

High Yield Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days High Yield Municipal Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, High Yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Macquarie Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macquarie Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with High Yield and Macquarie Group

The main advantage of trading using opposite High Yield and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield 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.

The idea behind High Yield Municipal Fund and Macquarie Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..