Correlation Between Macquarie Technology and Magellan Financial
Can any of the company-specific risk be diversified away by investing in both Macquarie Technology and Magellan Financial 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 Macquarie Technology and Magellan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Technology Group and Magellan Financial Group, you can compare the effects of market volatilities on Macquarie Technology and Magellan Financial 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 Macquarie Technology with a short position of Magellan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Technology and Magellan Financial.
Diversification Opportunities for Macquarie Technology and Magellan Financial
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Macquarie and Magellan is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Magellan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Financial and Macquarie Technology 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 Macquarie Technology Group are associated (or correlated) with Magellan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Financial has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Magellan Financial go up and down completely randomly.
Pair Corralation between Macquarie Technology and Magellan Financial
Assuming the 90 days trading horizon Macquarie Technology Group is expected to under-perform the Magellan Financial. But the stock apears to be less risky and, when comparing its historical volatility, Macquarie Technology Group is 1.82 times less risky than Magellan Financial. The stock trades about -0.01 of its potential returns per unit of risk. The Magellan Financial Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,083 in Magellan Financial Group on September 25, 2024 and sell it today you would earn a total of 22.00 from holding Magellan Financial Group or generate 2.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Macquarie Technology Group vs. Magellan Financial Group
Performance |
Timeline |
Macquarie Technology |
Magellan Financial |
Macquarie Technology and Magellan Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Macquarie Technology and Magellan Financial
The main advantage of trading using opposite Macquarie Technology and Magellan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Technology position performs unexpectedly, Magellan Financial 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 Magellan Financial will offset losses from the drop in Magellan Financial's long position.Macquarie Technology vs. Iron Road | Macquarie Technology vs. Data3 | Macquarie Technology vs. Embark Education Group | Macquarie Technology vs. Phoslock Environmental Technologies |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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