Correlation Between Microsoft and PREMIUM NICKEL
Can any of the company-specific risk be diversified away by investing in both Microsoft and PREMIUM NICKEL 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 PREMIUM NICKEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and PREMIUM NICKEL RESOURCES, you can compare the effects of market volatilities on Microsoft and PREMIUM NICKEL 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 PREMIUM NICKEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and PREMIUM NICKEL.
Diversification Opportunities for Microsoft and PREMIUM NICKEL
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and PREMIUM is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and PREMIUM NICKEL RESOURCES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIUM NICKEL RESOURCES 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 PREMIUM NICKEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIUM NICKEL RESOURCES has no effect on the direction of Microsoft i.e., Microsoft and PREMIUM NICKEL go up and down completely randomly.
Pair Corralation between Microsoft and PREMIUM NICKEL
Assuming the 90 days trading horizon Microsoft is expected to generate 0.36 times more return on investment than PREMIUM NICKEL. However, Microsoft is 2.81 times less risky than PREMIUM NICKEL. It trades about 0.02 of its potential returns per unit of risk. PREMIUM NICKEL RESOURCES is currently generating about -0.21 per unit of risk. If you would invest 39,432 in Microsoft on August 28, 2024 and sell it today you would earn a total of 233.00 from holding Microsoft or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. PREMIUM NICKEL RESOURCES
Performance |
| Timeline |
| Microsoft |
| PREMIUM NICKEL RESOURCES |
Microsoft and PREMIUM NICKEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and PREMIUM NICKEL
The main advantage of trading using opposite Microsoft and PREMIUM NICKEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, PREMIUM NICKEL 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 PREMIUM NICKEL will offset losses from the drop in PREMIUM NICKEL's long position.| Microsoft vs. AGF Management Limited | Microsoft vs. CHINA EDUCATION GROUP | Microsoft vs. DeVry Education Group | Microsoft vs. Brockhaus Capital Management |
| PREMIUM NICKEL vs. Apple Inc | PREMIUM NICKEL vs. Apple Inc | PREMIUM NICKEL vs. Apple Inc | PREMIUM NICKEL vs. Apple Inc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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