Correlation Between Macquarie Technology and Centuria Industrial

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

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

Diversification Opportunities for Macquarie Technology and Centuria Industrial

-0.51

Correlation Coefficient

Macquarie Technology  Centuria Industrial

Excellent diversification

The 3 months correlation between Macquarie and Centuria is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Centuria Industrial Reit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centuria Industrial Reit and Macquarie Technology 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 Macquarie Technology Group are associated (or correlated) with Centuria Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centuria Industrial Reit has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Centuria Industrial go up and down completely randomly.

Pair Corralation between Macquarie Technology and Centuria Industrial

Assuming the 90 days trading horizon Macquarie Technology Group is expected to generate 2.0 times more return on investment than Centuria Industrial. However, Macquarie Technology is 2.0 times more volatile than Centuria Industrial Reit. It trades about 0.07 of its potential returns per unit of risk. Centuria Industrial Reit is currently generating about -0.02 per unit of risk. If you would invest  6,600  in Macquarie Technology Group on October 3, 2024 and sell it today you would earn a total of  2,231  from holding Macquarie Technology Group or generate 33.8% return on investment over 90 days.

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

Macquarie Technology Group  vs.  Centuria Industrial Reit

Macquarie Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Technology Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Macquarie Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Centuria Industrial Reit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centuria Industrial Reit 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.

Pair Trading with Macquarie Technology and Centuria Industrial

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

The idea behind Macquarie Technology Group and Centuria Industrial Reit 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.