Correlation Between Moelis and Macquarie Group

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

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

Diversification Opportunities for Moelis and Macquarie Group

-0.06

Correlation Coefficient

Moelis  Macquarie Group

Good diversification

The 3 months correlation between Moelis and Macquarie is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Moelis 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 Moelis Co 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 Moelis i.e., Moelis and Macquarie Group go up and down completely randomly.

Pair Corralation between Moelis and Macquarie Group

Allowing for the 90-day total investment horizon Moelis is expected to generate 2.69 times less return on investment than Macquarie Group. In addition to that, Moelis is 1.51 times more volatile than Macquarie Group Ltd. It trades about 0.11 of its total potential returns per unit of risk. Macquarie Group Ltd is currently generating about 0.43 per unit of volatility. If you would invest  13,936  in Macquarie Group Ltd on October 26, 2024 and sell it today you would earn a total of  1,417  from holding Macquarie Group Ltd or generate 10.17% return on investment over 90 days.

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

Moelis Co  vs.  Macquarie Group Ltd

Moelis

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Moelis Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Moelis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Macquarie Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macquarie Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, 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 Moelis and Macquarie Group

The main advantage of trading using opposite Moelis and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moelis 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 Moelis Co 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 Global Correlations module to find global opportunities by holding instruments from different markets.