Correlation Between Macquarie Technology and Iluka Resources

Can any of the company-specific risk be diversified away by investing in both Macquarie Technology and Iluka Resources 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 Iluka Resources 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 Iluka Resources, you can compare the effects of market volatilities on Macquarie Technology and Iluka Resources 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 Iluka Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Technology and Iluka Resources.

Diversification Opportunities for Macquarie Technology and Iluka Resources

0.75

Correlation Coefficient

Macquarie Technology  Iluka Resources

Poor diversification

The 3 months correlation between Macquarie and Iluka is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Iluka Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iluka Resources 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 Iluka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iluka Resources has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Iluka Resources go up and down completely randomly.

Pair Corralation between Macquarie Technology and Iluka Resources

Assuming the 90 days trading horizon Macquarie Technology Group is expected to under-perform the Iluka Resources. But the stock apears to be less risky and, when comparing its historical volatility, Macquarie Technology Group is 1.44 times less risky than Iluka Resources. The stock trades about -0.23 of its potential returns per unit of risk. The Iluka Resources is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  494.00  in Iluka Resources on December 22, 2024 and sell it today you would lose (80.00) from holding Iluka Resources or give up 16.19% of portfolio value over 90 days.

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

Macquarie Technology Group  vs.  Iluka Resources

Macquarie Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Macquarie Technology Group 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Iluka Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iluka Resources 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Macquarie Technology and Iluka Resources

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

The idea behind Macquarie Technology Group and Iluka Resources 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.