Correlation Between Microsoft and Globex Mining
Can any of the company-specific risk be diversified away by investing in both Microsoft and Globex Mining 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 Globex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Globex Mining Enterprises, you can compare the effects of market volatilities on Microsoft and Globex Mining 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 Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Globex Mining.
Diversification Opportunities for Microsoft and Globex Mining
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Globex is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises 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 Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of Microsoft i.e., Microsoft and Globex Mining go up and down completely randomly.
Pair Corralation between Microsoft and Globex Mining
Given the investment horizon of 90 days Microsoft is expected to under-perform the Globex Mining. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.17 times less risky than Globex Mining. The stock trades about -0.09 of its potential returns per unit of risk. The Globex Mining Enterprises is currently generating about 0.58 of returns per unit of risk over similar time horizon. If you would invest 79.00 in Globex Mining Enterprises on November 5, 2024 and sell it today you would earn a total of 27.00 from holding Globex Mining Enterprises or generate 34.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Microsoft vs. Globex Mining Enterprises
Performance |
| Timeline |
| Microsoft |
| Globex Mining Enterprises |
Microsoft and Globex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Globex Mining
The main advantage of trading using opposite Microsoft and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Globex Mining 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 Globex Mining will offset losses from the drop in Globex Mining's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Globex Mining vs. PKSHA TECHNOLOGY INC | Globex Mining vs. HELIOS TECHS INC | Globex Mining vs. Agilent Technologies | Globex Mining vs. CLEAN ENERGY FUELS |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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