Correlation Between Macquarie and Regal Funds

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

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

Diversification Opportunities for Macquarie and Regal Funds

0.65

Correlation Coefficient

Macquarie  Regal Funds

Poor diversification

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

Pair Corralation between Macquarie and Regal Funds

Assuming the 90 days trading horizon Macquarie is expected to generate 1.41 times less return on investment than Regal Funds. But when comparing it to its historical volatility, Macquarie Group is 1.92 times less risky than Regal Funds. It trades about 0.08 of its potential returns per unit of risk. Regal Funds Management is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  314.00  in Regal Funds Management on September 27, 2024 and sell it today you would earn a total of  43.00  from holding Regal Funds Management or generate 13.69% return on investment over 90 days.

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

Macquarie Group  vs.  Regal Funds 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.

Regal Funds Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regal Funds Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Regal Funds is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Macquarie and Regal Funds

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

The idea behind Macquarie Group and Regal Funds 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.