Correlation Between Macquarie and Clime Investment

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

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

Diversification Opportunities for Macquarie and Clime Investment

0.1

Correlation Coefficient

Macquarie  Clime Investment

Average diversification

The 3 months correlation between Macquarie and Clime is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Clime Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clime Investment Man and Macquarie 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 Group are associated (or correlated) with Clime Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clime Investment Man has no effect on the direction of Macquarie i.e., Macquarie and Clime Investment go up and down completely randomly.

Pair Corralation between Macquarie and Clime Investment

Assuming the 90 days trading horizon Macquarie Group is expected to under-perform the Clime Investment. But the stock apears to be less risky and, when comparing its historical volatility, Macquarie Group is 2.13 times less risky than Clime Investment. The stock trades about -0.18 of its potential returns per unit of risk. The Clime Investment Management is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Clime Investment Management on September 27, 2024 and sell it today you would earn a total of  1.00  from holding Clime Investment Management or generate 2.86% return on investment over 90 days.

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

Macquarie Group  vs.  Clime Investment Management

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Clime Investment Man

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clime Investment Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Clime Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Macquarie and Clime Investment

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

The idea behind Macquarie Group and Clime Investment Management 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.