Correlation Between Microsoft Corp and Whitecap Resources
Can any of the company-specific risk be diversified away by investing in both Microsoft Corp and Whitecap Resources 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 Whitecap Resources 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 Whitecap Resources, you can compare the effects of market volatilities on Microsoft Corp and Whitecap Resources 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 Whitecap Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Whitecap Resources.
Diversification Opportunities for Microsoft Corp and Whitecap Resources
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Whitecap is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources 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 Whitecap Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitecap Resources has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Whitecap Resources go up and down completely randomly.
Pair Corralation between Microsoft Corp and Whitecap Resources
Assuming the 90 days trading horizon Microsoft Corp CDR is expected to generate 1.26 times more return on investment than Whitecap Resources. However, Microsoft Corp is 1.26 times more volatile than Whitecap Resources. It trades about -0.04 of its potential returns per unit of risk. Whitecap Resources is currently generating about -0.22 per unit of risk. If you would invest 3,099 in Microsoft Corp CDR on November 9, 2024 and sell it today you would lose (67.00) from holding Microsoft Corp CDR or give up 2.16% 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. Whitecap Resources
Performance |
| Timeline |
| Microsoft Corp CDR |
| Whitecap Resources |
Microsoft Corp and Whitecap Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft Corp and Whitecap Resources
The main advantage of trading using opposite Microsoft Corp and Whitecap Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Whitecap Resources 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 Whitecap Resources will offset losses from the drop in Whitecap Resources' long position.| Microsoft Corp vs. South Pacific Metals | Microsoft Corp vs. Advent Wireless | Microsoft Corp vs. Dream Office Real | Microsoft Corp vs. Sun Peak Metals |
| Whitecap Resources vs. ARC Resources | Whitecap Resources vs. Tourmaline Oil Corp | Whitecap Resources vs. MEG Energy Corp | Whitecap Resources vs. Baytex Energy 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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