Correlation Between Macquarie and Regis Healthcare

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

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

Diversification Opportunities for Macquarie and Regis Healthcare

0.44

Correlation Coefficient

Macquarie  Regis Healthcare

Very weak diversification

The 3 months correlation between Macquarie and Regis is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Regis Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regis Healthcare 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 Regis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regis Healthcare has no effect on the direction of Macquarie i.e., Macquarie and Regis Healthcare go up and down completely randomly.

Pair Corralation between Macquarie and Regis Healthcare

Assuming the 90 days trading horizon Macquarie is expected to generate 11.86 times less return on investment than Regis Healthcare. But when comparing it to its historical volatility, Macquarie Group is 1.72 times less risky than Regis Healthcare. It trades about 0.02 of its potential returns per unit of risk. Regis Healthcare is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  541.00  in Regis Healthcare on September 12, 2024 and sell it today you would earn a total of  102.00  from holding Regis Healthcare or generate 18.85% return on investment over 90 days.

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

Macquarie Group  vs.  Regis Healthcare

Macquarie Group

Risk-Adjusted Performance

1 of 100

Insignificant

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.

Regis Healthcare

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regis Healthcare are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Regis Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macquarie and Regis Healthcare

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

The idea behind Macquarie Group and Regis Healthcare 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.