Correlation Between Alternative Investment and Macquarie Group

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

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

Diversification Opportunities for Alternative Investment and Macquarie Group

0.41

Correlation Coefficient

Alternative Investment  Macquarie Group

Very weak diversification

The 3 months correlation between Alternative and Macquarie is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Investment Trust and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Alternative Investment 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 Alternative Investment Trust 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 Alternative Investment i.e., Alternative Investment and Macquarie Group go up and down completely randomly.

Pair Corralation between Alternative Investment and Macquarie Group

Assuming the 90 days trading horizon Alternative Investment Trust is expected to generate 1.22 times more return on investment than Macquarie Group. However, Alternative Investment is 1.22 times more volatile than Macquarie Group Ltd. It trades about 0.07 of its potential returns per unit of risk. Macquarie Group Ltd is currently generating about 0.06 per unit of risk. If you would invest  141.00  in Alternative Investment Trust on September 21, 2024 and sell it today you would earn a total of  3.00  from holding Alternative Investment Trust or generate 2.13% return on investment over 90 days.

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

Alternative Investment Trust  vs.  Macquarie Group Ltd

Alternative Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alternative Investment Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alternative Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Macquarie Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Group Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Macquarie Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alternative Investment and Macquarie Group

The main advantage of trading using opposite Alternative Investment and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Investment 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 Alternative Investment Trust 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.