Correlation Between Microsoft and Rockfire Resources
Can any of the company-specific risk be diversified away by investing in both Microsoft and Rockfire Resources 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 Microsoft and Rockfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Rockfire Resources plc, you can compare the effects of market volatilities on Microsoft and Rockfire Resources 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 Microsoft with a short position of Rockfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Rockfire Resources.
Diversification Opportunities for Microsoft and Rockfire Resources
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and Rockfire is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Rockfire Resources plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockfire Resources plc and Microsoft 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 Microsoft are associated (or correlated) with Rockfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockfire Resources plc has no effect on the direction of Microsoft i.e., Microsoft and Rockfire Resources go up and down completely randomly.
Pair Corralation between Microsoft and Rockfire Resources
If you would invest 11.00 in Rockfire Resources plc on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Rockfire Resources plc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Rockfire Resources plc
Performance |
| Timeline |
| Microsoft |
| Rockfire Resources plc |
Microsoft and Rockfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Rockfire Resources
The main advantage of trading using opposite Microsoft and Rockfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Rockfire Resources 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 Rockfire Resources will offset losses from the drop in Rockfire Resources' long position.| Microsoft vs. Blackrock World Mining | Microsoft vs. McEwen Mining | Microsoft vs. Wheaton Precious Metals | Microsoft vs. Panther Metals PLC |
| Rockfire Resources vs. Ironveld Plc | Rockfire Resources vs. Foresight Environmental Infrastructure | Rockfire Resources vs. Coeur Mining | Rockfire Resources vs. Invesco Physical Silver |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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