Correlation Between FSA Group and Macquarie

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

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

Diversification Opportunities for FSA Group and Macquarie

-0.31

Correlation Coefficient

FSA Group  Macquarie

Very good diversification

The 3 months correlation between FSA and Macquarie is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding FSA Group and Macquarie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and FSA Group 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 FSA Group 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 FSA Group i.e., FSA Group and Macquarie go up and down completely randomly.

Pair Corralation between FSA Group and Macquarie

Assuming the 90 days trading horizon FSA Group is expected to generate 1.32 times more return on investment than Macquarie. However, FSA Group is 1.32 times more volatile than Macquarie Group. It trades about 0.07 of its potential returns per unit of risk. Macquarie Group is currently generating about -0.09 per unit of risk. If you would invest  77.00  in FSA Group on December 30, 2024 and sell it today you would earn a total of  6.00  from holding FSA Group or generate 7.79% return on investment over 90 days.

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

FSA Group  vs.  Macquarie Group

FSA Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FSA Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FSA Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Macquarie Group

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with FSA Group and Macquarie

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

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.