Correlation Between Macquarie and Kip McGrath

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

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

Diversification Opportunities for Macquarie and Kip McGrath

-0.26

Correlation Coefficient

Macquarie  Kip McGrath

Very good diversification

The 3 months correlation between Macquarie and Kip is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Kip McGrath Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kip McGrath Education 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 Kip McGrath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kip McGrath Education has no effect on the direction of Macquarie i.e., Macquarie and Kip McGrath go up and down completely randomly.

Pair Corralation between Macquarie and Kip McGrath

Assuming the 90 days trading horizon Macquarie is expected to generate 1.49 times less return on investment than Kip McGrath. But when comparing it to its historical volatility, Macquarie Group is 2.14 times less risky than Kip McGrath. It trades about 0.11 of its potential returns per unit of risk. Kip McGrath Education is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Kip McGrath Education on August 31, 2024 and sell it today you would earn a total of  5.00  from holding Kip McGrath Education or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Macquarie Group  vs.  Kip McGrath Education

Macquarie Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Macquarie may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Kip McGrath Education

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kip McGrath Education are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Kip McGrath may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Macquarie and Kip McGrath

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

The idea behind Macquarie Group and Kip McGrath Education 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.