Correlation Between Macquarie and Prime Financial
Can any of the company-specific risk be diversified away by investing in both Macquarie and Prime 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 and Prime Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group and Prime Financial Group, you can compare the effects of market volatilities on Macquarie and Prime 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 with a short position of Prime Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie and Prime Financial.
Diversification Opportunities for Macquarie and Prime Financial
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Macquarie and Prime is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group and Prime Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Financial Group 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 Prime Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Financial Group has no effect on the direction of Macquarie i.e., Macquarie and Prime Financial go up and down completely randomly.
Pair Corralation between Macquarie and Prime Financial
Assuming the 90 days trading horizon Macquarie Group is expected to generate 0.39 times more return on investment than Prime Financial. However, Macquarie Group is 2.58 times less risky than Prime Financial. It trades about 0.07 of its potential returns per unit of risk. Prime Financial Group is currently generating about 0.02 per unit of risk. If you would invest 15,312 in Macquarie Group on September 24, 2024 and sell it today you would earn a total of 6,578 from holding Macquarie Group or generate 42.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Macquarie Group vs. Prime Financial Group
Performance |
Timeline |
Macquarie Group |
Prime Financial Group |
Macquarie and Prime Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Macquarie and Prime Financial
The main advantage of trading using opposite Macquarie and Prime Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie position performs unexpectedly, Prime 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 Prime Financial will offset losses from the drop in Prime Financial's long position.Macquarie vs. Advanced Braking Technology | Macquarie vs. Home Consortium | Macquarie vs. Ras Technology Holdings | Macquarie vs. Genetic 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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