Correlation Between Microsoft and Coinbase Wrapped
Can any of the company-specific risk be diversified away by investing in both Microsoft and Coinbase Wrapped 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 Coinbase Wrapped into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Coinbase Wrapped Staked, you can compare the effects of market volatilities on Microsoft and Coinbase Wrapped 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 Coinbase Wrapped. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Coinbase Wrapped.
Diversification Opportunities for Microsoft and Coinbase Wrapped
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Coinbase is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Coinbase Wrapped Staked in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coinbase Wrapped Staked 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 Coinbase Wrapped. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coinbase Wrapped Staked has no effect on the direction of Microsoft i.e., Microsoft and Coinbase Wrapped go up and down completely randomly.
Pair Corralation between Microsoft and Coinbase Wrapped
Given the investment horizon of 90 days Microsoft is expected to under-perform the Coinbase Wrapped. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.71 times less risky than Coinbase Wrapped. The stock trades about -0.04 of its potential returns per unit of risk. The Coinbase Wrapped Staked is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 287,189 in Coinbase Wrapped Staked on August 30, 2024 and sell it today you would earn a total of 101,700 from holding Coinbase Wrapped Staked or generate 35.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Coinbase Wrapped Staked
Performance |
| Timeline |
| Microsoft |
| Coinbase Wrapped Staked |
Microsoft and Coinbase Wrapped Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Coinbase Wrapped
The main advantage of trading using opposite Microsoft and Coinbase Wrapped positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Coinbase Wrapped 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 Coinbase Wrapped will offset losses from the drop in Coinbase Wrapped's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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