Correlation Between Macquarie and Chalice Mining

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

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

Diversification Opportunities for Macquarie and Chalice Mining

0.2

Correlation Coefficient

Macquarie  Chalice Mining

Modest diversification

The 3 months correlation between Macquarie and Chalice is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining 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 Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of Macquarie i.e., Macquarie and Chalice Mining go up and down completely randomly.

Pair Corralation between Macquarie and Chalice Mining

Assuming the 90 days trading horizon Macquarie is expected to generate 3.47 times less return on investment than Chalice Mining. But when comparing it to its historical volatility, Macquarie Group is 2.25 times less risky than Chalice Mining. It trades about 0.15 of its potential returns per unit of risk. Chalice Mining Limited is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  111.00  in Chalice Mining Limited on October 22, 2024 and sell it today you would earn a total of  13.00  from holding Chalice Mining Limited or generate 11.71% 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.  Chalice Mining Limited

Macquarie Group

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Group 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, Macquarie is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Chalice Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chalice Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Macquarie and Chalice Mining

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

The idea behind Macquarie Group and Chalice Mining Limited 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.