Correlation Between Microsoft and Atco Mining
Can any of the company-specific risk be diversified away by investing in both Microsoft and Atco Mining 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 Atco Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Atco Mining, you can compare the effects of market volatilities on Microsoft and Atco Mining 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 Atco Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Atco Mining.
Diversification Opportunities for Microsoft and Atco Mining
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Atco is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Atco Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atco Mining 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 Atco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atco Mining has no effect on the direction of Microsoft i.e., Microsoft and Atco Mining go up and down completely randomly.
Pair Corralation between Microsoft and Atco Mining
Given the investment horizon of 90 days Microsoft is expected to generate 60.38 times less return on investment than Atco Mining. But when comparing it to its historical volatility, Microsoft is 12.73 times less risky than Atco Mining. It trades about 0.01 of its potential returns per unit of risk. Atco Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4.10 in Atco Mining on September 3, 2024 and sell it today you would lose (2.78) from holding Atco Mining or give up 67.8% 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. Atco Mining
Performance |
| Timeline |
| Microsoft |
| Atco Mining |
Microsoft and Atco Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Atco Mining
The main advantage of trading using opposite Microsoft and Atco Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Atco Mining 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 Atco Mining will offset losses from the drop in Atco Mining's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Atco Mining vs. Volaris | Atco Mining vs. Meli Hotels International | Atco Mining vs. Shake Shack | Atco Mining vs. Dalata Hotel Group |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |