Correlation Between Macquarie Group and Hess
Can any of the company-specific risk be diversified away by investing in both Macquarie Group and Hess 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 Hess 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 Hess Corporation, you can compare the effects of market volatilities on Macquarie Group and Hess 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 Hess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Hess.
Diversification Opportunities for Macquarie Group and Hess
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Macquarie and Hess is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Hess Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hess 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 Hess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hess has no effect on the direction of Macquarie Group i.e., Macquarie Group and Hess go up and down completely randomly.
Pair Corralation between Macquarie Group and Hess
Assuming the 90 days horizon Macquarie Group Ltd is expected to under-perform the Hess. In addition to that, Macquarie Group is 1.05 times more volatile than Hess Corporation. It trades about -0.19 of its total potential returns per unit of risk. Hess Corporation is currently generating about 0.16 per unit of volatility. If you would invest 15,138 in Hess Corporation on January 24, 2024 and sell it today you would earn a total of 556.00 from holding Hess Corporation or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Group Ltd vs. Hess Corp.
Performance |
| Timeline |
| Macquarie Group |
| Hess |
Macquarie Group and Hess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and Hess
The main advantage of trading using opposite Macquarie Group and Hess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group position performs unexpectedly, Hess 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 Hess will offset losses from the drop in Hess' long position.| Macquarie Group vs. Up Fintech Holding | Macquarie Group vs. CITIC Securities | Macquarie Group vs. Futu Holdings | Macquarie Group vs. Bit Digital |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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