Correlation Between Microsoft and Golden Entertainment
Can any of the company-specific risk be diversified away by investing in both Microsoft and Golden Entertainment 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 Golden Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Golden Entertainment, you can compare the effects of market volatilities on Microsoft and Golden Entertainment 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 Golden Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Golden Entertainment.
Diversification Opportunities for Microsoft and Golden Entertainment
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Golden is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Golden Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Entertainment 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 Golden Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Entertainment has no effect on the direction of Microsoft i.e., Microsoft and Golden Entertainment go up and down completely randomly.
Pair Corralation between Microsoft and Golden Entertainment
Given the investment horizon of 90 days Microsoft is expected to generate 0.57 times more return on investment than Golden Entertainment. However, Microsoft is 1.75 times less risky than Golden Entertainment. It trades about 0.03 of its potential returns per unit of risk. Golden Entertainment is currently generating about 0.0 per unit of risk. If you would invest 37,986 in Microsoft on August 24, 2024 and sell it today you would earn a total of 3,262 from holding Microsoft or generate 8.59% 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. Golden Entertainment
Performance |
| Timeline |
| Microsoft |
| Golden Entertainment |
Microsoft and Golden Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Golden Entertainment
The main advantage of trading using opposite Microsoft and Golden Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Golden Entertainment 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 Golden Entertainment will offset losses from the drop in Golden Entertainment's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Golden Entertainment vs. Red Rock Resorts | Golden Entertainment vs. Century Casinos | Golden Entertainment vs. Studio City International | Golden Entertainment vs. Ballys Corp |
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.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |