Correlation Between Macquarie Bank and Environmental

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

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

Diversification Opportunities for Macquarie Bank and Environmental

-0.41

Correlation Coefficient

Macquarie Bank  Environmental

Very good diversification

The 3 months correlation between Macquarie and Environmental is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and The Environmental Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Environmental and Macquarie Bank 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 Bank Limited are associated (or correlated) with Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Environmental has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and Environmental go up and down completely randomly.

Pair Corralation between Macquarie Bank and Environmental

Assuming the 90 days trading horizon Macquarie Bank Limited is expected to generate 0.17 times more return on investment than Environmental. However, Macquarie Bank Limited is 5.79 times less risky than Environmental. It trades about 0.07 of its potential returns per unit of risk. The Environmental Group is currently generating about -0.12 per unit of risk. If you would invest  10,173  in Macquarie Bank Limited on September 28, 2024 and sell it today you would earn a total of  227.00  from holding Macquarie Bank Limited or generate 2.23% return on investment over 90 days.

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

Macquarie Bank Limited  vs.  The Environmental Group

Macquarie Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Bank Limited are ranked lower than 5 (%) 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.

The Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Environmental Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential 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.

Pair Trading with Macquarie Bank and Environmental

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

The idea behind Macquarie Bank Limited and The Environmental 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.