Correlation Between Macquarie and Argo Investments

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

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

Diversification Opportunities for Macquarie and Argo Investments

0.47

Correlation Coefficient

Macquarie  Argo Investments

Very weak diversification

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

Pair Corralation between Macquarie and Argo Investments

Assuming the 90 days trading horizon Macquarie Group is expected to under-perform the Argo Investments. In addition to that, Macquarie is 1.33 times more volatile than Argo Investments. It trades about -0.13 of its total potential returns per unit of risk. Argo Investments is currently generating about -0.05 per unit of volatility. If you would invest  903.00  in Argo Investments on September 24, 2024 and sell it today you would lose (8.00) from holding Argo Investments or give up 0.89% of portfolio value over 90 days.

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

Macquarie Group  vs.  Argo Investments

Macquarie Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macquarie Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Macquarie is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Argo Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Argo Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Macquarie and Argo Investments

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

The idea behind Macquarie Group and Argo Investments 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.

Check out your portfolio center.

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..