Correlation Between Microsoft and Allegiant Gold
Can any of the company-specific risk be diversified away by investing in both Microsoft and Allegiant Gold 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 Allegiant Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Allegiant Gold, you can compare the effects of market volatilities on Microsoft and Allegiant Gold 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 Allegiant Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Allegiant Gold.
Diversification Opportunities for Microsoft and Allegiant Gold
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Allegiant is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Allegiant Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Gold 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 Allegiant Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegiant Gold has no effect on the direction of Microsoft i.e., Microsoft and Allegiant Gold go up and down completely randomly.
Pair Corralation between Microsoft and Allegiant Gold
Given the investment horizon of 90 days Microsoft is expected to generate 0.15 times more return on investment than Allegiant Gold. However, Microsoft is 6.48 times less risky than Allegiant Gold. It trades about 0.19 of its potential returns per unit of risk. Allegiant Gold is currently generating about -0.2 per unit of risk. If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Allegiant Gold
Performance |
| Timeline |
| Microsoft |
| Allegiant Gold |
Microsoft and Allegiant Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Allegiant Gold
The main advantage of trading using opposite Microsoft and Allegiant Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Allegiant Gold 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 Allegiant Gold will offset losses from the drop in Allegiant Gold's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Allegiant Gold vs. South32 Limited | Allegiant Gold vs. NioCorp Developments Ltd | Allegiant Gold vs. HUMANA INC | Allegiant Gold vs. SCOR PK |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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