Correlation Between Macquarie Group and Aquagold International

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

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

Diversification Opportunities for Macquarie Group and Aquagold International

0.07

Correlation Coefficient

Macquarie Group  Aquagold International

Significant diversification

The 3 months correlation between Macquarie and Aquagold is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International and Macquarie Group 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 Group Ltd are associated (or correlated) with Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Macquarie Group i.e., Macquarie Group and Aquagold International go up and down completely randomly.

Pair Corralation between Macquarie Group and Aquagold International

Assuming the 90 days horizon Macquarie Group Ltd is expected to generate 0.27 times more return on investment than Aquagold International. However, Macquarie Group Ltd is 3.74 times less risky than Aquagold International. It trades about -0.1 of its potential returns per unit of risk. Aquagold International is currently generating about -0.13 per unit of risk. If you would invest  13,938  in Macquarie Group Ltd on December 22, 2024 and sell it today you would lose (1,508) from holding Macquarie Group Ltd or give up 10.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Macquarie Group Ltd  vs.  Aquagold International

Macquarie Group

Risk-Adjusted Performance

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 latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Macquarie Group and Aquagold International

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

The idea behind Macquarie Group Ltd and Aquagold International 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.