Correlation Between Microsoft and Endeavour Mining
Can any of the company-specific risk be diversified away by investing in both Microsoft and Endeavour Mining 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 Endeavour Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Endeavour Mining PLC, you can compare the effects of market volatilities on Microsoft and Endeavour Mining 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 Endeavour Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Endeavour Mining.
Diversification Opportunities for Microsoft and Endeavour Mining
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and Endeavour is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Endeavour Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining 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 Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining PLC has no effect on the direction of Microsoft i.e., Microsoft and Endeavour Mining go up and down completely randomly.
Pair Corralation between Microsoft and Endeavour Mining
Assuming the 90 days trading horizon Microsoft is expected to generate 0.57 times more return on investment than Endeavour Mining. However, Microsoft is 1.76 times less risky than Endeavour Mining. It trades about 0.09 of its potential returns per unit of risk. Endeavour Mining PLC is currently generating about 0.0 per unit of risk. If you would invest 22,059 in Microsoft on October 13, 2024 and sell it today you would earn a total of 18,751 from holding Microsoft or generate 85.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Microsoft vs. Endeavour Mining PLC
Performance |
| Timeline |
| Microsoft |
| Endeavour Mining PLC |
Microsoft and Endeavour Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Endeavour Mining
The main advantage of trading using opposite Microsoft and Endeavour Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Endeavour Mining 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 Endeavour Mining will offset losses from the drop in Endeavour Mining's long position.| Microsoft vs. Take Two Interactive Software | Microsoft vs. BRIT AMER TOBACCO | Microsoft vs. Chesapeake Utilities | Microsoft vs. GBS Software AG |
| Endeavour Mining vs. Dairy Farm International | Endeavour Mining vs. VIENNA INSURANCE GR | Endeavour Mining vs. WIMFARM SA EO | Endeavour Mining vs. Vienna Insurance Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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