Correlation Between Macquarie Group and Invion

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

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

Diversification Opportunities for Macquarie Group and Invion

-0.2

Correlation Coefficient

Macquarie Group  Invion

Good diversification

The 3 months correlation between Macquarie and Invion is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Invion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invion and Macquarie Group 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 Ltd are associated (or correlated) with Invion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invion has no effect on the direction of Macquarie Group i.e., Macquarie Group and Invion go up and down completely randomly.

Pair Corralation between Macquarie Group and Invion

Assuming the 90 days trading horizon Macquarie Group is expected to generate 73.37 times less return on investment than Invion. But when comparing it to its historical volatility, Macquarie Group Ltd is 57.26 times less risky than Invion. It trades about 0.07 of its potential returns per unit of risk. Invion is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Invion on September 23, 2024 and sell it today you would lose (4.00) from holding Invion or give up 13.33% of portfolio value over 90 days.

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

Macquarie Group Ltd  vs.  Invion

Macquarie Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Group Ltd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Macquarie Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Invion

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invion are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Invion unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macquarie Group and Invion

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

The idea behind Macquarie Group Ltd and Invion 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .