Correlation Between Macquarie Group and Technology One
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Technology One 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 Group and Technology One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group Ltd and Technology One, you can compare the effects of market volatilities on Macquarie Group and Technology One 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 Group with a short position of Technology One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Technology One.
Diversification Opportunities for Macquarie Group and Technology One
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Macquarie and Technology is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Technology One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology One and Macquarie Group 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 Ltd are associated (or correlated) with Technology One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology One has no effect on the direction of Macquarie Group i.e., Macquarie Group and Technology One go up and down completely randomly.
Pair Corralation between Macquarie Group and Technology One
Assuming the 90 days trading horizon Macquarie Group is expected to generate 7.44 times less return on investment than Technology One. But when comparing it to its historical volatility, Macquarie Group Ltd is 3.52 times less risky than Technology One. It trades about 0.06 of its potential returns per unit of risk. Technology One is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,373 in Technology One on October 10, 2024 and sell it today you would earn a total of 1,707 from holding Technology One or generate 124.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Macquarie Group Ltd vs. Technology One
Performance |
Timeline |
Macquarie Group |
Technology One |
Macquarie Group and Technology One Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Macquarie Group and Technology One
The main advantage of trading using opposite Macquarie Group and Technology One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, Technology One 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 Technology One will offset losses from the drop in Technology One's long position.Macquarie Group vs. Westpac Banking | Macquarie Group vs. Austco Healthcare | Macquarie Group vs. Oneview Healthcare PLC | Macquarie Group vs. BTC Health Limited |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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