Correlation Between Charter Hall and Macquarie Bank

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

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

Diversification Opportunities for Charter Hall and Macquarie Bank

-0.8

Correlation Coefficient

Charter Hall  Macquarie Bank

Pay attention - limited upside

The 3 months correlation between Charter and Macquarie is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Macquarie Bank Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Bank and Charter Hall 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 Charter Hall Retail are associated (or correlated) with Macquarie Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Bank has no effect on the direction of Charter Hall i.e., Charter Hall and Macquarie Bank go up and down completely randomly.

Pair Corralation between Charter Hall and Macquarie Bank

Assuming the 90 days trading horizon Charter Hall Retail is expected to under-perform the Macquarie Bank. In addition to that, Charter Hall is 3.94 times more volatile than Macquarie Bank Ltd. It trades about -0.14 of its total potential returns per unit of risk. Macquarie Bank Ltd is currently generating about 0.05 per unit of volatility. If you would invest  10,380  in Macquarie Bank Ltd on September 6, 2024 and sell it today you would earn a total of  91.00  from holding Macquarie Bank Ltd or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Charter Hall Retail  vs.  Macquarie Bank Ltd

Charter Hall Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charter Hall Retail has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Macquarie Bank

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Bank Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Macquarie Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Charter Hall and Macquarie Bank

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

The idea behind Charter Hall Retail and Macquarie Bank 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.