Correlation Between Macquarie Group and Nutritional Growth
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Nutritional Growth 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 Nutritional Growth 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 Nutritional Growth Solutions, you can compare the effects of market volatilities on Macquarie Group and Nutritional Growth 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 Nutritional Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Nutritional Growth.
Diversification Opportunities for Macquarie Group and Nutritional Growth
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Macquarie and Nutritional is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Nutritional Growth Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutritional Growth 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 Nutritional Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutritional Growth has no effect on the direction of Macquarie Group i.e., Macquarie Group and Nutritional Growth go up and down completely randomly.
Pair Corralation between Macquarie Group and Nutritional Growth
Assuming the 90 days trading horizon Macquarie Group is expected to generate 44.67 times less return on investment than Nutritional Growth. But when comparing it to its historical volatility, Macquarie Group Ltd is 13.04 times less risky than Nutritional Growth. It trades about 0.06 of its potential returns per unit of risk. Nutritional Growth Solutions is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2.80 in Nutritional Growth Solutions on September 25, 2024 and sell it today you would earn a total of 1.70 from holding Nutritional Growth Solutions or generate 60.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 75.0% |
Values | Daily Returns |
Macquarie Group Ltd vs. Nutritional Growth Solutions
Performance |
Timeline |
Macquarie Group |
Nutritional Growth |
Macquarie Group and Nutritional Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Macquarie Group and Nutritional Growth
The main advantage of trading using opposite Macquarie Group and Nutritional Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, Nutritional Growth 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 Nutritional Growth will offset losses from the drop in Nutritional Growth's long position.Macquarie Group vs. Actinogen Medical | Macquarie Group vs. Kip McGrath Education | Macquarie Group vs. Beston Global Food | Macquarie Group vs. Infomedia |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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