Correlation Between Microsoft and First Majestic
Can any of the company-specific risk be diversified away by investing in both Microsoft and First Majestic 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 First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and First Majestic Silver, you can compare the effects of market volatilities on Microsoft and First Majestic 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 First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and First Majestic.
Diversification Opportunities for Microsoft and First Majestic
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and First is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver 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 First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Microsoft i.e., Microsoft and First Majestic go up and down completely randomly.
Pair Corralation between Microsoft and First Majestic
Given the investment horizon of 90 days Microsoft is expected to generate 0.67 times more return on investment than First Majestic. However, Microsoft is 1.49 times less risky than First Majestic. It trades about -0.04 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.35 per unit of risk. If you would invest 43,167 in Microsoft on August 31, 2024 and sell it today you would lose (868.00) from holding Microsoft or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. First Majestic Silver
Performance |
| Timeline |
| Microsoft |
| First Majestic Silver |
Microsoft and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and First Majestic
The main advantage of trading using opposite Microsoft and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| First Majestic vs. Nova Leap Health | First Majestic vs. Leveljump Healthcare Corp | First Majestic vs. Perseus Mining | First Majestic vs. CVS HEALTH 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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