Correlation Between Microsoft and Coastal Contacts
Can any of the company-specific risk be diversified away by investing in both Microsoft and Coastal Contacts 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 Coastal Contacts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Coastal Contacts, you can compare the effects of market volatilities on Microsoft and Coastal Contacts 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 Coastal Contacts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Coastal Contacts.
Diversification Opportunities for Microsoft and Coastal Contacts
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and Coastal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Coastal Contacts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Contacts 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 Coastal Contacts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Contacts has no effect on the direction of Microsoft i.e., Microsoft and Coastal Contacts go up and down completely randomly.
Pair Corralation between Microsoft and Coastal Contacts
If you would invest 42,615 in Microsoft on September 12, 2024 and sell it today you would earn a total of 2,284 from holding Microsoft or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Microsoft vs. Coastal Contacts
Performance |
| Timeline |
| Microsoft |
| Coastal Contacts |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Coastal Contacts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Coastal Contacts
The main advantage of trading using opposite Microsoft and Coastal Contacts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Coastal Contacts 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 Coastal Contacts will offset losses from the drop in Coastal Contacts' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Coastal Contacts vs. Acco Brands | Coastal Contacts vs. WEBTOON Entertainment Common | Coastal Contacts vs. 51Talk Online Education | Coastal Contacts vs. Fevertree Drinks Plc |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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