Correlation Between Macquarie Group and Zenith Minerals

Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Zenith Minerals 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 Zenith Minerals 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 Zenith Minerals, you can compare the effects of market volatilities on Macquarie Group and Zenith Minerals 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 Zenith Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Zenith Minerals.

Diversification Opportunities for Macquarie Group and Zenith Minerals

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Correlation Coefficient

Macquarie Group  Zenith Minerals

Pay attention - limited upside

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

Pair Corralation between Macquarie Group and Zenith Minerals

If you would invest (100.00) in Macquarie Group Ltd on October 1, 2024 and sell it today you would earn a total of  100.00  from holding Macquarie Group Ltd or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Macquarie Group Ltd  vs.  Zenith Minerals

Macquarie Group

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Macquarie Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Macquarie Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zenith Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Macquarie Group Ltd and Zenith Minerals 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.