Correlation Between Insignia Financial and Macquarie Group

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

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

Diversification Opportunities for Insignia Financial and Macquarie Group

0.42

Correlation Coefficient

Insignia Financial  Macquarie Group

Very weak diversification

The 3 months correlation between Insignia and Macquarie is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Insignia Financial and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Insignia Financial 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 Insignia Financial 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 Insignia Financial i.e., Insignia Financial and Macquarie Group go up and down completely randomly.

Pair Corralation between Insignia Financial and Macquarie Group

Assuming the 90 days trading horizon Insignia Financial is expected to generate 6.99 times more return on investment than Macquarie Group. However, Insignia Financial is 6.99 times more volatile than Macquarie Group Ltd. It trades about 0.1 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  219.00  in Insignia Financial on October 9, 2024 and sell it today you would earn a total of  191.00  from holding Insignia Financial or generate 87.21% return on investment over 90 days.

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

Insignia Financial  vs.  Macquarie Group Ltd

Insignia Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Insignia Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Insignia Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Macquarie Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Group Ltd are ranked lower than 5 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Insignia Financial and Macquarie Group

The main advantage of trading using opposite Insignia Financial and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insignia Financial 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 Insignia Financial 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.