Correlation Between Macquarie and Health

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

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

Diversification Opportunities for Macquarie and Health

0.0

Correlation Coefficient

Macquarie  Health

Pay attention - limited upside

The 3 months correlation between Macquarie and Health is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Health and Plant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health and Plant 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 Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health and Plant has no effect on the direction of Macquarie i.e., Macquarie and Health go up and down completely randomly.

Pair Corralation between Macquarie and Health

If you would invest  17,377  in Macquarie Group on September 13, 2024 and sell it today you would earn a total of  5,134  from holding Macquarie Group or generate 29.54% return on investment over 90 days.

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

Macquarie Group  vs.  Health and Plant

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.

Health and Plant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Health and Plant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Health 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 Health

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

The idea behind Macquarie Group and Health and Plant 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.