Correlation Between Maggie Beer and Australian Dollar

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

By analyzing existing cross correlation between Maggie Beer Holdings and Australian Dollar Currency, you can compare the effects of market volatilities on Maggie Beer and Australian Dollar 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 Maggie Beer with a short position of Australian Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maggie Beer and Australian Dollar.

Diversification Opportunities for Maggie Beer and Australian Dollar

-0.2

Correlation Coefficient

Maggie Beer  Australian Dollar

Good diversification

The 3 months correlation between Maggie and Australian is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Maggie Beer Holdings and Australian Dollar Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Dollar and Maggie Beer 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 Maggie Beer Holdings are associated (or correlated) with Australian Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Dollar has no effect on the direction of Maggie Beer i.e., Maggie Beer and Australian Dollar go up and down completely randomly.

Pair Corralation between Maggie Beer and Australian Dollar

Assuming the 90 days trading horizon Maggie Beer Holdings is expected to generate 6.34 times more return on investment than Australian Dollar. However, Maggie Beer is 6.34 times more volatile than Australian Dollar Currency. It trades about 0.08 of its potential returns per unit of risk. Australian Dollar Currency is currently generating about -0.01 per unit of risk. If you would invest  5.50  in Maggie Beer Holdings on December 24, 2024 and sell it today you would earn a total of  0.60  from holding Maggie Beer Holdings or generate 10.91% return on investment over 90 days.

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

Maggie Beer Holdings  vs.  Australian Dollar Currency

Pair Trading with Maggie Beer and Australian Dollar

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

The idea behind Maggie Beer Holdings and Australian Dollar Currency 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.