Correlation Between Ag Growth and Macquarie Group

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

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

Diversification Opportunities for Ag Growth and Macquarie Group

0.41

Correlation Coefficient

Ag Growth  Macquarie Group

Very weak diversification

The 3 months correlation between AGGZF and Macquarie is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ag Growth International and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Ag Growth 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 Ag Growth International are associated (or correlated) with Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Ag Growth i.e., Ag Growth and Macquarie Group go up and down completely randomly.

Pair Corralation between Ag Growth and Macquarie Group

Assuming the 90 days horizon Ag Growth International is expected to under-perform the Macquarie Group. In addition to that, Ag Growth is 1.72 times more volatile than Macquarie Group Ltd. It trades about -0.38 of its total potential returns per unit of risk. Macquarie Group Ltd is currently generating about -0.15 per unit of volatility. If you would invest  12,874  in Macquarie Group Ltd on February 5, 2024 and sell it today you would lose (730.00) from holding Macquarie Group Ltd or give up 5.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Ag Growth International  vs.  Macquarie Group Ltd

Ag Growth International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ag Growth International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Macquarie Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macquarie Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Macquarie Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ag Growth and Macquarie Group

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

The idea behind Ag Growth International and Macquarie Group Ltd 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.