Correlation Between Black Rock and Macquarie Bank

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

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

Diversification Opportunities for Black Rock and Macquarie Bank

-0.18

Correlation Coefficient

Black Rock  Macquarie Bank

Good diversification

The 3 months correlation between Black and Macquarie is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock Mining and Macquarie Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Bank and Black Rock 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 Black Rock Mining are associated (or correlated) with Macquarie Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Bank has no effect on the direction of Black Rock i.e., Black Rock and Macquarie Bank go up and down completely randomly.

Pair Corralation between Black Rock and Macquarie Bank

Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Macquarie Bank. In addition to that, Black Rock is 7.57 times more volatile than Macquarie Bank Limited. It trades about -0.14 of its total potential returns per unit of risk. Macquarie Bank Limited is currently generating about 0.06 per unit of volatility. If you would invest  10,193  in Macquarie Bank Limited on September 26, 2024 and sell it today you would earn a total of  207.00  from holding Macquarie Bank Limited or generate 2.03% return on investment over 90 days.

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

Black Rock Mining  vs.  Macquarie Bank Limited

Black Rock Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Rock Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Macquarie Bank

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Black Rock and Macquarie Bank

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

The idea behind Black Rock Mining and Macquarie Bank Limited 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.