Correlation Between Microsoft Corp and Wilmington Capital
Can any of the company-specific risk be diversified away by investing in both Microsoft Corp and Wilmington Capital 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 Wilmington Capital 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 Wilmington Capital Management, you can compare the effects of market volatilities on Microsoft Corp and Wilmington Capital 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 Wilmington Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Wilmington Capital.
Diversification Opportunities for Microsoft Corp and Wilmington Capital
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Wilmington is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital 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 Wilmington Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Capital has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Wilmington Capital go up and down completely randomly.
Pair Corralation between Microsoft Corp and Wilmington Capital
Assuming the 90 days trading horizon Microsoft Corp CDR is expected to under-perform the Wilmington Capital. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft Corp CDR is 1.62 times less risky than Wilmington Capital. The stock trades about -0.07 of its potential returns per unit of risk. The Wilmington Capital Management is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Wilmington Capital Management on August 26, 2024 and sell it today you would earn a total of 31.00 from holding Wilmington Capital Management or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft Corp CDR vs. Wilmington Capital Management
Performance |
| Timeline |
| Microsoft Corp CDR |
| Wilmington Capital |
Microsoft Corp and Wilmington Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft Corp and Wilmington Capital
The main advantage of trading using opposite Microsoft Corp and Wilmington Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Wilmington Capital 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 Wilmington Capital will offset losses from the drop in Wilmington Capital's long position.| Microsoft Corp vs. Algoma Steel Group | Microsoft Corp vs. SPoT Coffee | Microsoft Corp vs. Perseus Mining | Microsoft Corp vs. Data Communications Management |
| Wilmington Capital vs. NVIDIA CDR | Wilmington Capital vs. Apple Inc CDR | Wilmington Capital vs. Microsoft Corp CDR | Wilmington Capital vs. Amazon CDR |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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