Correlation Between Argo Investments and Macquarie

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

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

Diversification Opportunities for Argo Investments and Macquarie

0.47

Correlation Coefficient

Argo Investments  Macquarie

Very weak diversification

The 3 months correlation between Argo and Macquarie is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Argo Investments and Macquarie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Argo Investments 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 Argo Investments 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 Argo Investments i.e., Argo Investments and Macquarie go up and down completely randomly.

Pair Corralation between Argo Investments and Macquarie

Assuming the 90 days trading horizon Argo Investments is expected to generate 0.76 times more return on investment than Macquarie. However, Argo Investments is 1.31 times less risky than Macquarie. It trades about -0.03 of its potential returns per unit of risk. Macquarie Group is currently generating about -0.06 per unit of risk. If you would invest  900.00  in Argo Investments on September 19, 2024 and sell it today you would lose (4.00) from holding Argo Investments or give up 0.44% of portfolio value over 90 days.

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

Argo Investments  vs.  Macquarie Group

Argo Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Argo Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Macquarie Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macquarie Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Macquarie is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Argo Investments and Macquarie

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

The idea behind Argo Investments and Macquarie Group 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.