Correlation Between Microsoft and Copper Lake
Can any of the company-specific risk be diversified away by investing in both Microsoft and Copper Lake 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 Copper Lake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Copper Lake Resources, you can compare the effects of market volatilities on Microsoft and Copper Lake 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 Copper Lake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Copper Lake.
Diversification Opportunities for Microsoft and Copper Lake
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Copper is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Copper Lake Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Lake Resources 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 Copper Lake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Lake Resources has no effect on the direction of Microsoft i.e., Microsoft and Copper Lake go up and down completely randomly.
Pair Corralation between Microsoft and Copper Lake
Given the investment horizon of 90 days Microsoft is expected to generate 10.7 times less return on investment than Copper Lake. But when comparing it to its historical volatility, Microsoft is 31.54 times less risky than Copper Lake. It trades about 0.19 of its potential returns per unit of risk. Copper Lake Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Copper Lake Resources on September 1, 2024 and sell it today you would lose (0.50) from holding Copper Lake Resources or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Copper Lake Resources
Performance |
| Timeline |
| Microsoft |
| Copper Lake Resources |
Microsoft and Copper Lake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Copper Lake
The main advantage of trading using opposite Microsoft and Copper Lake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Copper Lake 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 Copper Lake will offset losses from the drop in Copper Lake's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Copper Lake vs. Black Widow Resources | Copper Lake vs. Eros Resources Corp | Copper Lake vs. Magnum Goldcorp |
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.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |