Correlation Between Microsoft and EMX Royalty
Can any of the company-specific risk be diversified away by investing in both Microsoft and EMX Royalty 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 EMX Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and EMX Royalty Corp, you can compare the effects of market volatilities on Microsoft and EMX Royalty 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 EMX Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and EMX Royalty.
Diversification Opportunities for Microsoft and EMX Royalty
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and EMX is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and EMX Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMX Royalty 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 EMX Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMX Royalty Corp has no effect on the direction of Microsoft i.e., Microsoft and EMX Royalty go up and down completely randomly.
Pair Corralation between Microsoft and EMX Royalty
Given the investment horizon of 90 days Microsoft is expected to generate 0.58 times more return on investment than EMX Royalty. However, Microsoft is 1.72 times less risky than EMX Royalty. It trades about 0.06 of its potential returns per unit of risk. EMX Royalty Corp is currently generating about 0.01 per unit of risk. If you would invest 32,151 in Microsoft on August 31, 2024 and sell it today you would earn a total of 10,195 from holding Microsoft or generate 31.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Microsoft vs. EMX Royalty Corp
Performance |
| Timeline |
| Microsoft |
| EMX Royalty Corp |
Microsoft and EMX Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and EMX Royalty
The main advantage of trading using opposite Microsoft and EMX Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, EMX Royalty 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 EMX Royalty will offset losses from the drop in EMX Royalty's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| EMX Royalty vs. Radius Gold | EMX Royalty vs. Mirasol Resources | EMX Royalty vs. Eagle Plains Resources | EMX Royalty vs. Bluestone Resources |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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