Correlation Between Macquarie Technology and Northern Star
Can any of the company-specific risk be diversified away by investing in both Macquarie Technology and Northern Star 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 Northern Star 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 Northern Star Resources, you can compare the effects of market volatilities on Macquarie Technology and Northern Star 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 Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Technology and Northern Star.
Diversification Opportunities for Macquarie Technology and Northern Star
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Macquarie and Northern is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources 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 Northern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Northern Star go up and down completely randomly.
Pair Corralation between Macquarie Technology and Northern Star
Assuming the 90 days trading horizon Macquarie Technology Group is expected to generate 0.69 times more return on investment than Northern Star. However, Macquarie Technology Group is 1.44 times less risky than Northern Star. It trades about 0.06 of its potential returns per unit of risk. Northern Star Resources is currently generating about -0.02 per unit of risk. If you would invest 8,128 in Macquarie Technology Group on September 25, 2024 and sell it today you would earn a total of 472.00 from holding Macquarie Technology Group or generate 5.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Macquarie Technology Group vs. Northern Star Resources
Performance |
Timeline |
Macquarie Technology |
Northern Star Resources |
Macquarie Technology and Northern Star Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Macquarie Technology and Northern Star
The main advantage of trading using opposite Macquarie Technology and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Technology position performs unexpectedly, Northern Star 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 Northern Star will offset losses from the drop in Northern Star'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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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