Correlation Between Microsoft and Bonterra Energy
Can any of the company-specific risk be diversified away by investing in both Microsoft and Bonterra Energy 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 Bonterra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Bonterra Energy Corp, you can compare the effects of market volatilities on Microsoft and Bonterra Energy 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 Bonterra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bonterra Energy.
Diversification Opportunities for Microsoft and Bonterra Energy
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Bonterra is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bonterra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonterra Energy Corp 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 Bonterra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonterra Energy Corp has no effect on the direction of Microsoft i.e., Microsoft and Bonterra Energy go up and down completely randomly.
Pair Corralation between Microsoft and Bonterra Energy
Given the investment horizon of 90 days Microsoft is expected to generate 0.55 times more return on investment than Bonterra Energy. However, Microsoft is 1.8 times less risky than Bonterra Energy. It trades about 0.08 of its potential returns per unit of risk. Bonterra Energy Corp is currently generating about -0.04 per unit of risk. If you would invest 24,470 in Microsoft on November 29, 2024 and sell it today you would earn a total of 14,783 from holding Microsoft or generate 60.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Bonterra Energy Corp
Performance |
| Timeline |
| Microsoft |
| Bonterra Energy Corp |
Microsoft and Bonterra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Bonterra Energy
The main advantage of trading using opposite Microsoft and Bonterra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Bonterra Energy 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 Bonterra Energy will offset losses from the drop in Bonterra Energy's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Bonterra Energy vs. Obsidian Energy | Bonterra Energy vs. Cardinal Energy | Bonterra Energy vs. Advantage Oil Gas | Bonterra Energy vs. Kelt Exploration |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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