Correlation Between Freedom Day and Macquarie ETF

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

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

Diversification Opportunities for Freedom Day and Macquarie ETF

0.65

Correlation Coefficient

Freedom Day  Macquarie ETF

Poor diversification

The 3 months correlation between Freedom and Macquarie is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Day Dividend and Macquarie ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie ETF Trust and Freedom Day 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 Freedom Day Dividend are associated (or correlated) with Macquarie ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie ETF Trust has no effect on the direction of Freedom Day i.e., Freedom Day and Macquarie ETF go up and down completely randomly.

Pair Corralation between Freedom Day and Macquarie ETF

Given the investment horizon of 90 days Freedom Day Dividend is expected to under-perform the Macquarie ETF. But the etf apears to be less risky and, when comparing its historical volatility, Freedom Day Dividend is 1.54 times less risky than Macquarie ETF. The etf trades about -0.02 of its potential returns per unit of risk. The Macquarie ETF Trust is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,825  in Macquarie ETF Trust on September 13, 2024 and sell it today you would earn a total of  4.00  from holding Macquarie ETF Trust or generate 0.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Freedom Day Dividend  vs.  Macquarie ETF Trust

Freedom Day Dividend

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Day Dividend are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Freedom Day is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Macquarie ETF Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie ETF Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Macquarie ETF is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Freedom Day and Macquarie ETF

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

The idea behind Freedom Day Dividend and Macquarie ETF Trust 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.