Correlation Between Aquagold International and Macquarie Group

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

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

Diversification Opportunities for Aquagold International and Macquarie Group

0.67

Correlation Coefficient

Aquagold International  Macquarie Group

Poor diversification

The 3 months correlation between Aquagold and Macquarie is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Aquagold International 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 Aquagold International 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 Aquagold International i.e., Aquagold International and Macquarie Group go up and down completely randomly.

Pair Corralation between Aquagold International and Macquarie Group

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Macquarie Group. In addition to that, Aquagold International is 17.16 times more volatile than Macquarie Group Ltd. It trades about -0.22 of its total potential returns per unit of risk. Macquarie Group Ltd is currently generating about -0.26 per unit of volatility. If you would invest  14,933  in Macquarie Group Ltd on October 10, 2024 and sell it today you would lose (972.00) from holding Macquarie Group Ltd or give up 6.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Aquagold International  vs.  Macquarie Group Ltd

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 Aquagold International and Macquarie Group

The main advantage of trading using opposite Aquagold International and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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 Aquagold International 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.