Correlation Between Microsoft and Gamedust
Can any of the company-specific risk be diversified away by investing in both Microsoft and Gamedust 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 Gamedust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Gamedust SA, you can compare the effects of market volatilities on Microsoft and Gamedust 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 Gamedust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Gamedust.
Diversification Opportunities for Microsoft and Gamedust
Very good diversification
The 3 months correlation between Microsoft and Gamedust is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Gamedust SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamedust SA 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 Gamedust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamedust SA has no effect on the direction of Microsoft i.e., Microsoft and Gamedust go up and down completely randomly.
Pair Corralation between Microsoft and Gamedust
Given the investment horizon of 90 days Microsoft is expected to generate 0.5 times more return on investment than Gamedust. However, Microsoft is 1.98 times less risky than Gamedust. It trades about 0.06 of its potential returns per unit of risk. Gamedust SA is currently generating about -0.29 per unit of risk. If you would invest 42,574 in Microsoft on October 26, 2024 and sell it today you would earn a total of 2,097 from holding Microsoft or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 89.83% |
| Values | Daily Returns |
Microsoft vs. Gamedust SA
Performance |
| Timeline |
| Microsoft |
| Gamedust SA |
Microsoft and Gamedust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Gamedust
The main advantage of trading using opposite Microsoft and Gamedust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Gamedust 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 Gamedust will offset losses from the drop in Gamedust's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
| Gamedust vs. Saule Technologies SA | Gamedust vs. Cloud Technologies SA | Gamedust vs. Gaming Factory SA | Gamedust vs. All In Games |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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