Correlation Between Microsoft and Bitcoin ETF
Can any of the company-specific risk be diversified away by investing in both Microsoft and Bitcoin ETF 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 Bitcoin ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Bitcoin ETF CAD, you can compare the effects of market volatilities on Microsoft and Bitcoin ETF 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 Bitcoin ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bitcoin ETF.
Diversification Opportunities for Microsoft and Bitcoin ETF
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Bitcoin is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bitcoin ETF CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin ETF CAD 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 Bitcoin ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin ETF CAD has no effect on the direction of Microsoft i.e., Microsoft and Bitcoin ETF go up and down completely randomly.
Pair Corralation between Microsoft and Bitcoin ETF
Given the investment horizon of 90 days Microsoft is expected to generate 35.28 times less return on investment than Bitcoin ETF. But when comparing it to its historical volatility, Microsoft is 2.5 times less risky than Bitcoin ETF. It trades about 0.02 of its potential returns per unit of risk. Bitcoin ETF CAD is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 3,457 in Bitcoin ETF CAD on August 28, 2024 and sell it today you would earn a total of 1,122 from holding Bitcoin ETF CAD or generate 32.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Bitcoin ETF CAD
Performance |
| Timeline |
| Microsoft |
| Bitcoin ETF CAD |
Microsoft and Bitcoin ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Bitcoin ETF
The main advantage of trading using opposite Microsoft and Bitcoin ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Bitcoin ETF 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 Bitcoin ETF will offset losses from the drop in Bitcoin ETF's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Bitcoin ETF vs. Bitcoin ETF | Bitcoin ETF vs. NBI High Yield | Bitcoin ETF vs. NBI Unconstrained Fixed | Bitcoin ETF vs. Mackenzie Developed ex North |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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