Correlation Between Macquarie Group and Via Renewables

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

Diversification Opportunities for Macquarie Group and Via Renewables

-0.77

Correlation Coefficient

Macquarie Group  Via Renewables

Pay attention - limited upside

The 3 months correlation between Macquarie and Via is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables 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 Via Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Renewables has no effect on the direction of Macquarie Group i.e., Macquarie Group and Via Renewables go up and down completely randomly.

Pair Corralation between Macquarie Group and Via Renewables

Assuming the 90 days horizon Macquarie Group Ltd is expected to generate 1.47 times more return on investment than Via Renewables. However, Macquarie Group is 1.47 times more volatile than Via Renewables. It trades about 0.35 of its potential returns per unit of risk. Via Renewables is currently generating about 0.2 per unit of risk. If you would invest  13,897  in Macquarie Group Ltd on October 25, 2024 and sell it today you would earn a total of  1,088  from holding Macquarie Group Ltd or generate 7.83% return on investment over 90 days.

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

Macquarie Group Ltd  vs.  Via Renewables

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.

Via Renewables

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macquarie Group and Via Renewables

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

The idea behind Macquarie Group Ltd and Via Renewables 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.