Correlation Between Falcon Metals and Macquarie Group

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

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

Diversification Opportunities for Falcon Metals and Macquarie Group

-0.6

Correlation Coefficient

Falcon Metals  Macquarie Group

Excellent diversification

The 3 months correlation between Falcon and Macquarie is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Falcon Metals 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 Falcon Metals 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 Falcon Metals i.e., Falcon Metals and Macquarie Group go up and down completely randomly.

Pair Corralation between Falcon Metals and Macquarie Group

Assuming the 90 days trading horizon Falcon Metals is expected to generate 19.08 times more return on investment than Macquarie Group. However, Falcon Metals is 19.08 times more volatile than Macquarie Group Ltd. It trades about 0.03 of its potential returns per unit of risk. Macquarie Group Ltd is currently generating about 0.06 per unit of risk. If you would invest  14.00  in Falcon Metals on October 7, 2024 and sell it today you would lose (2.00) from holding Falcon Metals or give up 14.29% of portfolio value over 90 days.

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

Falcon Metals  vs.  Macquarie Group Ltd

Falcon Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Macquarie Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Group Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Macquarie Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Falcon Metals and Macquarie Group

The main advantage of trading using opposite Falcon Metals and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals 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 Falcon Metals 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.