Correlation Between Microsoft Corp and Equinox Gold
Can any of the company-specific risk be diversified away by investing in both Microsoft Corp and Equinox Gold 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 Equinox Gold 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 Equinox Gold Corp, you can compare the effects of market volatilities on Microsoft Corp and Equinox Gold 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 Equinox Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Equinox Gold.
Diversification Opportunities for Microsoft Corp and Equinox Gold
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and Equinox is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Equinox Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinox Gold Corp 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 Equinox Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinox Gold Corp has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Equinox Gold go up and down completely randomly.
Pair Corralation between Microsoft Corp and Equinox Gold
Assuming the 90 days trading horizon Microsoft Corp is expected to generate 1.22 times less return on investment than Equinox Gold. But when comparing it to its historical volatility, Microsoft Corp CDR is 3.22 times less risky than Equinox Gold. It trades about 0.16 of its potential returns per unit of risk. Equinox Gold Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 770.00 in Equinox Gold Corp on September 1, 2024 and sell it today you would earn a total of 26.00 from holding Equinox Gold Corp or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft Corp CDR vs. Equinox Gold Corp
Performance |
| Timeline |
| Microsoft Corp CDR |
| Equinox Gold Corp |
Microsoft Corp and Equinox Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft Corp and Equinox Gold
The main advantage of trading using opposite Microsoft Corp and Equinox Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Equinox Gold 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 Equinox Gold will offset losses from the drop in Equinox Gold's long position.| Microsoft Corp vs. Northview Residential REIT | Microsoft Corp vs. Winshear Gold Corp | Microsoft Corp vs. Wilmington Capital Management | Microsoft Corp vs. Till Capital |
| Equinox Gold vs. First Majestic Silver | Equinox Gold vs. Ivanhoe Energy | Equinox Gold vs. Orezone Gold Corp | Equinox Gold vs. Faraday Copper 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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