Correlation Between Macquarie and Bendigo

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

By analyzing existing cross correlation between Macquarie Group and Bendigo And Adelaide, you can compare the effects of market volatilities on Macquarie and Bendigo 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 Bendigo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie and Bendigo.

Diversification Opportunities for Macquarie and Bendigo

0.37

Correlation Coefficient

Macquarie  Bendigo

Weak diversification

The 3 months correlation between Macquarie and Bendigo is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Bendigo And Adelaide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bendigo And Adelaide 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 Bendigo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bendigo And Adelaide has no effect on the direction of Macquarie i.e., Macquarie and Bendigo go up and down completely randomly.

Pair Corralation between Macquarie and Bendigo

Assuming the 90 days trading horizon Macquarie is expected to generate 11.33 times less return on investment than Bendigo. In addition to that, Macquarie is 1.09 times more volatile than Bendigo And Adelaide. It trades about 0.01 of its total potential returns per unit of risk. Bendigo And Adelaide is currently generating about 0.14 per unit of volatility. If you would invest  1,217  in Bendigo And Adelaide on September 12, 2024 and sell it today you would earn a total of  109.00  from holding Bendigo And Adelaide or generate 8.96% return on investment over 90 days.

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

Macquarie Group  vs.  Bendigo And Adelaide

Macquarie Group

Risk-Adjusted Performance

0 of 100

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Bendigo And Adelaide

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bendigo And Adelaide are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bendigo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Macquarie and Bendigo

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

The idea behind Macquarie Group and Bendigo And Adelaide 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.