Correlation Between Microsoft and Excellon Resources
Can any of the company-specific risk be diversified away by investing in both Microsoft and Excellon Resources 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 Excellon Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Excellon Resources, you can compare the effects of market volatilities on Microsoft and Excellon Resources 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 Excellon Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Excellon Resources.
Diversification Opportunities for Microsoft and Excellon Resources
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and Excellon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Excellon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excellon 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 Excellon Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excellon Resources has no effect on the direction of Microsoft i.e., Microsoft and Excellon Resources go up and down completely randomly.
Pair Corralation between Microsoft and Excellon Resources
Given the investment horizon of 90 days Microsoft is expected to generate 3.97 times less return on investment than Excellon Resources. But when comparing it to its historical volatility, Microsoft is 2.2 times less risky than Excellon Resources. It trades about 0.08 of its potential returns per unit of risk. Excellon Resources is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Excellon Resources on September 3, 2024 and sell it today you would earn a total of 1.00 from holding Excellon Resources or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 1.62% |
| Values | Daily Returns |
Microsoft vs. Excellon Resources
Performance |
| Timeline |
| Microsoft |
| Excellon Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Excellon Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Excellon Resources
The main advantage of trading using opposite Microsoft and Excellon Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Excellon Resources 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 Excellon Resources will offset losses from the drop in Excellon Resources' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Excellon Resources vs. Arrow Electronics | Excellon Resources vs. Diageo PLC ADR | Excellon Resources vs. Uber Technologies | Excellon Resources vs. Western Acquisition Ventures |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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