Correlation Between Microsoft Corp and Canfor
Can any of the company-specific risk be diversified away by investing in both Microsoft Corp and Canfor 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 Corp and Canfor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft Corp CDR and Canfor, you can compare the effects of market volatilities on Microsoft Corp and Canfor 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 Corp with a short position of Canfor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Canfor.
Diversification Opportunities for Microsoft Corp and Canfor
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Canfor is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor and Microsoft Corp 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 Corp CDR are associated (or correlated) with Canfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Canfor go up and down completely randomly.
Pair Corralation between Microsoft Corp and Canfor
Assuming the 90 days trading horizon Microsoft Corp CDR is expected to under-perform the Canfor. In addition to that, Microsoft Corp is 1.64 times more volatile than Canfor. It trades about -0.07 of its total potential returns per unit of risk. Canfor is currently generating about -0.06 per unit of volatility. If you would invest 1,506 in Canfor on November 10, 2024 and sell it today you would lose (26.00) from holding Canfor or give up 1.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft Corp CDR vs. Canfor
Performance |
| Timeline |
| Microsoft Corp CDR |
| Canfor |
Microsoft Corp and Canfor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft Corp and Canfor
The main advantage of trading using opposite Microsoft Corp and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Canfor 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 Canfor will offset losses from the drop in Canfor's long position.| Microsoft Corp vs. Canaf Investments | Microsoft Corp vs. Advent Wireless | Microsoft Corp vs. High Liner Foods | Microsoft Corp vs. Maple Peak Investments |
| Canfor vs. Maple Peak Investments | Canfor vs. Marimaca Copper Corp | Canfor vs. Upstart Investments | Canfor vs. Calibre Mining Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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