Correlation Between Stifel Financial and Macquarie Group

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

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

Diversification Opportunities for Stifel Financial and Macquarie Group

-0.16

Correlation Coefficient

Stifel Financial  Macquarie Group

Good diversification

The 3 months correlation between Stifel and Macquarie is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Stifel Financial 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 Stifel Financial are associated (or correlated) with Macquarie Group. 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 Stifel Financial i.e., Stifel Financial and Macquarie Group go up and down completely randomly.

Pair Corralation between Stifel Financial and Macquarie Group

Allowing for the 90-day total investment horizon Stifel Financial is expected to generate 1.37 times more return on investment than Macquarie Group. However, Stifel Financial is 1.37 times more volatile than Macquarie Group Ltd. It trades about -0.06 of its potential returns per unit of risk. Macquarie Group Ltd is currently generating about -0.18 per unit of risk. If you would invest  11,062  in Stifel Financial on October 11, 2024 and sell it today you would lose (210.00) from holding Stifel Financial or give up 1.9% of portfolio value over 90 days.

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

Stifel Financial  vs.  Macquarie Group Ltd

Stifel Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stifel Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Stifel Financial reported 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 Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Stifel Financial and Macquarie Group

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

The idea behind Stifel Financial and Macquarie Group Ltd 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.