Correlation Between Macquarie Technology and Venus Metals

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

Diversification Opportunities for Macquarie Technology and Venus Metals

0.47

Correlation Coefficient

Macquarie Technology  Venus Metals

Very weak diversification

The 3 months correlation between Macquarie and Venus is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Venus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Venus Metals 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 Venus Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Venus Metals has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Venus Metals go up and down completely randomly.

Pair Corralation between Macquarie Technology and Venus Metals

Assuming the 90 days trading horizon Macquarie Technology Group is expected to generate 0.22 times more return on investment than Venus Metals. However, Macquarie Technology Group is 4.47 times less risky than Venus Metals. It trades about 0.11 of its potential returns per unit of risk. Venus Metals is currently generating about 0.02 per unit of risk. If you would invest  7,930  in Macquarie Technology Group on August 31, 2024 and sell it today you would earn a total of  812.00  from holding Macquarie Technology Group or generate 10.24% return on investment over 90 days.

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

Macquarie Technology Group  vs.  Venus Metals

Macquarie Technology

Risk-Adjusted Performance

9 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Technology Group are ranked lower than 9 (%) 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 December 2024.

Venus Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Venus Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Venus Metals may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Macquarie Technology and Venus Metals

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

The idea behind Macquarie Technology Group and Venus Metals 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..