Correlation Between Microsoft and Franklin Gold
Can any of the company-specific risk be diversified away by investing in both Microsoft and Franklin Gold 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 Franklin Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Franklin Gold Precious, you can compare the effects of market volatilities on Microsoft and Franklin Gold 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 Franklin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Franklin Gold.
Diversification Opportunities for Microsoft and Franklin Gold
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Franklin is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Franklin Gold Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Gold Precious 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 Franklin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Gold Precious has no effect on the direction of Microsoft i.e., Microsoft and Franklin Gold go up and down completely randomly.
Pair Corralation between Microsoft and Franklin Gold
Given the investment horizon of 90 days Microsoft is expected to generate 0.78 times more return on investment than Franklin Gold. However, Microsoft is 1.28 times less risky than Franklin Gold. It trades about 0.06 of its potential returns per unit of risk. Franklin Gold Precious is currently generating about 0.05 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 | 100.0% |
| Values | Daily Returns |
Microsoft vs. Franklin Gold Precious
Performance |
| Timeline |
| Microsoft |
| Franklin Gold Precious |
Microsoft and Franklin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Franklin Gold
The main advantage of trading using opposite Microsoft and Franklin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Franklin Gold 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 Franklin Gold will offset losses from the drop in Franklin Gold's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Franklin Gold vs. First Eagle Gold | Franklin Gold vs. First Eagle Gold | Franklin Gold vs. First Eagle Gold | Franklin Gold vs. Oppenheimer Gold Special |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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