Correlation Between Microsoft and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Microsoft and Southern Copper 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 Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Southern Copper Corp, you can compare the effects of market volatilities on Microsoft and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Southern Copper.
Diversification Opportunities for Microsoft and Southern Copper
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Southern is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Southern Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper Corp 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper Corp has no effect on the direction of Microsoft i.e., Microsoft and Southern Copper go up and down completely randomly.
Pair Corralation between Microsoft and Southern Copper
Given the investment horizon of 90 days Microsoft is expected to generate 0.75 times more return on investment than Southern Copper. However, Microsoft is 1.34 times less risky than Southern Copper. It trades about 0.01 of its potential returns per unit of risk. Southern Copper Corp is currently generating about -0.2 per unit of risk. If you would invest 42,717 in Microsoft on August 28, 2024 and sell it today you would earn a total of 82.00 from holding Microsoft or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Southern Copper Corp
Performance |
| Timeline |
| Microsoft |
| Southern Copper Corp |
Microsoft and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Southern Copper
The main advantage of trading using opposite Microsoft and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Southern Copper vs. Samsung Electronics Co | Southern Copper vs. Samsung Electronics Co | Southern Copper vs. Hyundai Motor | Southern Copper vs. Toyota Motor 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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