Correlation Between Carlton Investments and Macquarie

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

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

Diversification Opportunities for Carlton Investments and Macquarie

0.09

Correlation Coefficient

Carlton Investments  Macquarie

Significant diversification

The 3 months correlation between Carlton and Macquarie is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Carlton Investments and Macquarie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Carlton Investments 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 Carlton Investments 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 Carlton Investments i.e., Carlton Investments and Macquarie go up and down completely randomly.

Pair Corralation between Carlton Investments and Macquarie

Assuming the 90 days trading horizon Carlton Investments is expected to generate 0.7 times more return on investment than Macquarie. However, Carlton Investments is 1.43 times less risky than Macquarie. It trades about 0.01 of its potential returns per unit of risk. Macquarie Group is currently generating about -0.05 per unit of risk. If you would invest  3,010  in Carlton Investments on September 25, 2024 and sell it today you would earn a total of  5.00  from holding Carlton Investments or generate 0.17% return on investment over 90 days.

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

Carlton Investments  vs.  Macquarie Group

Carlton Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carlton Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carlton Investments 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

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 Carlton Investments and Macquarie

The main advantage of trading using opposite Carlton Investments and Macquarie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlton Investments 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 Carlton Investments 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.