Correlation Between Mystate and Macquarie

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

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

Diversification Opportunities for Mystate and Macquarie

-0.22

Correlation Coefficient

Mystate  Macquarie

Very good diversification

The 3 months correlation between Mystate and Macquarie is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mystate and Macquarie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Mystate 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 Mystate are associated (or correlated) with Macquarie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Mystate i.e., Mystate and Macquarie go up and down completely randomly.

Pair Corralation between Mystate and Macquarie

Assuming the 90 days trading horizon Mystate is expected to generate 1.17 times more return on investment than Macquarie. However, Mystate is 1.17 times more volatile than Macquarie Group. It trades about 0.22 of its potential returns per unit of risk. Macquarie Group is currently generating about 0.01 per unit of risk. If you would invest  365.00  in Mystate on October 12, 2024 and sell it today you would earn a total of  73.00  from holding Mystate or generate 20.0% return on investment over 90 days.

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

Mystate  vs.  Macquarie Group

Mystate

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mystate are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mystate unveiled solid returns over the last few months and may actually be approaching a breakup point.

Macquarie Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macquarie Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Mystate and Macquarie

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

The idea behind Mystate and Macquarie Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.