Correlation Between Microsoft and Banyan Gold
Can any of the company-specific risk be diversified away by investing in both Microsoft and Banyan 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 Banyan Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Banyan Gold Corp, you can compare the effects of market volatilities on Microsoft and Banyan 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 Banyan Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Banyan Gold.
Diversification Opportunities for Microsoft and Banyan Gold
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and Banyan is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Banyan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banyan Gold 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 Banyan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banyan Gold Corp has no effect on the direction of Microsoft i.e., Microsoft and Banyan Gold go up and down completely randomly.
Pair Corralation between Microsoft and Banyan Gold
Given the investment horizon of 90 days Microsoft is expected to under-perform the Banyan Gold. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.04 times less risky than Banyan Gold. The stock trades about -0.01 of its potential returns per unit of risk. The Banyan Gold Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Banyan Gold Corp on November 3, 2024 and sell it today you would earn a total of 3.00 from holding Banyan Gold Corp or generate 23.08% 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. Banyan Gold Corp
Performance |
| Timeline |
| Microsoft |
| Banyan Gold Corp |
Microsoft and Banyan Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Banyan Gold
The main advantage of trading using opposite Microsoft and Banyan Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Banyan 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 Banyan Gold will offset losses from the drop in Banyan Gold's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Banyan Gold vs. Antioquia Gold | Banyan Gold vs. C2C Gold Corp | Banyan Gold vs. Asante Gold | Banyan Gold vs. Dynacor Gold Mines |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Commodity Directory Find actively traded commodities issued by global exchanges |