Correlation Between Macquarie and GQG Partners

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

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

Diversification Opportunities for Macquarie and GQG Partners

0.12

Correlation Coefficient

Macquarie  GQG Partners

Average diversification

The 3 months correlation between Macquarie and GQG is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and GQG Partners DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GQG Partners DRC 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 GQG Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GQG Partners DRC has no effect on the direction of Macquarie i.e., Macquarie and GQG Partners go up and down completely randomly.

Pair Corralation between Macquarie and GQG Partners

Assuming the 90 days trading horizon Macquarie Group is expected to generate 0.38 times more return on investment than GQG Partners. However, Macquarie Group is 2.62 times less risky than GQG Partners. It trades about 0.11 of its potential returns per unit of risk. GQG Partners DRC is currently generating about 0.03 per unit of risk. If you would invest  17,504  in Macquarie Group on October 14, 2024 and sell it today you would earn a total of  5,616  from holding Macquarie Group or generate 32.08% return on investment over 90 days.

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

Macquarie Group  vs.  GQG Partners DRC

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.

GQG Partners DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GQG Partners DRC 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 technical and fundamental 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 GQG Partners

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

The idea behind Macquarie Group and GQG Partners DRC 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.