Correlation Between Microsoft and Blue Coast
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By analyzing existing cross correlation between Microsoft and Blue Coast Hotels, you can compare the effects of market volatilities on Microsoft and Blue Coast 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 Blue Coast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Blue Coast.
Diversification Opportunities for Microsoft and Blue Coast
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Blue is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Blue Coast Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Coast Hotels 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 Blue Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Coast Hotels has no effect on the direction of Microsoft i.e., Microsoft and Blue Coast go up and down completely randomly.
Pair Corralation between Microsoft and Blue Coast
Given the investment horizon of 90 days Microsoft is expected to generate 1.04 times more return on investment than Blue Coast. However, Microsoft is 1.04 times more volatile than Blue Coast Hotels. It trades about 0.19 of its potential returns per unit of risk. Blue Coast Hotels is currently generating about -0.22 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Blue Coast Hotels
Performance |
| Timeline |
| Microsoft |
| Blue Coast Hotels |
Microsoft and Blue Coast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Blue Coast
The main advantage of trading using opposite Microsoft and Blue Coast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Blue Coast 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 Blue Coast will offset losses from the drop in Blue Coast's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Blue Coast vs. Indian Railway Finance | Blue Coast vs. Cholamandalam Financial Holdings | Blue Coast vs. Reliance Industries Limited | Blue Coast vs. Tata Consultancy Services |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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