Correlation Between Microsoft and Atlas Lithium
Can any of the company-specific risk be diversified away by investing in both Microsoft and Atlas Lithium 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 Atlas Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Atlas Lithium, you can compare the effects of market volatilities on Microsoft and Atlas Lithium 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 Atlas Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Atlas Lithium.
Diversification Opportunities for Microsoft and Atlas Lithium
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Atlas is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Atlas Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Lithium 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 Atlas Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Lithium has no effect on the direction of Microsoft i.e., Microsoft and Atlas Lithium go up and down completely randomly.
Pair Corralation between Microsoft and Atlas Lithium
Given the investment horizon of 90 days Microsoft is expected to under-perform the Atlas Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.84 times less risky than Atlas Lithium. The stock trades about -0.03 of its potential returns per unit of risk. The Atlas Lithium is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 633.00 in Atlas Lithium on November 1, 2024 and sell it today you would lose (3.00) from holding Atlas Lithium or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Atlas Lithium
Performance |
| Timeline |
| Microsoft |
| Atlas Lithium |
Microsoft and Atlas Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Atlas Lithium
The main advantage of trading using opposite Microsoft and Atlas Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Atlas Lithium 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 Atlas Lithium will offset losses from the drop in Atlas Lithium's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Atlas Lithium vs. SilverCrest Metals | Atlas Lithium vs. New Pacific Metals | Atlas Lithium vs. Endeavour Silver Corp | Atlas Lithium vs. McEwen Mining |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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