Correlation Between Macquarie and Insignia Financial
Can any of the company-specific risk be diversified away by investing in both Macquarie and Insignia Financial 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 Insignia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group and Insignia Financial, you can compare the effects of market volatilities on Macquarie and Insignia Financial 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 Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie and Insignia Financial.
Diversification Opportunities for Macquarie and Insignia Financial
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Macquarie and Insignia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial 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 Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of Macquarie i.e., Macquarie and Insignia Financial go up and down completely randomly.
Pair Corralation between Macquarie and Insignia Financial
Assuming the 90 days trading horizon Macquarie Group is expected to under-perform the Insignia Financial. But the stock apears to be less risky and, when comparing its historical volatility, Macquarie Group is 3.21 times less risky than Insignia Financial. The stock trades about -0.14 of its potential returns per unit of risk. The Insignia Financial is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 318.00 in Insignia Financial on September 26, 2024 and sell it today you would earn a total of 39.00 from holding Insignia Financial or generate 12.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Macquarie Group vs. Insignia Financial
Performance |
Timeline |
Macquarie Group |
Insignia Financial |
Macquarie and Insignia Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Macquarie and Insignia Financial
The main advantage of trading using opposite Macquarie and Insignia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie position performs unexpectedly, Insignia Financial 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 Insignia Financial will offset losses from the drop in Insignia Financial's long position.Macquarie vs. Westpac Banking | Macquarie vs. Ecofibre | Macquarie vs. iShares Global Healthcare | Macquarie vs. Adriatic Metals Plc |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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