Correlation Between Microsoft and Green Minerals
Can any of the company-specific risk be diversified away by investing in both Microsoft and Green Minerals 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 Green Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Green Minerals AS, you can compare the effects of market volatilities on Microsoft and Green Minerals 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 Green Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Green Minerals.
Diversification Opportunities for Microsoft and Green Minerals
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Green is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Green Minerals AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Minerals AS 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 Green Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Minerals AS has no effect on the direction of Microsoft i.e., Microsoft and Green Minerals go up and down completely randomly.
Pair Corralation between Microsoft and Green Minerals
Given the investment horizon of 90 days Microsoft is expected to generate 0.17 times more return on investment than Green Minerals. However, Microsoft is 5.95 times less risky than Green Minerals. It trades about 0.07 of its potential returns per unit of risk. Green Minerals AS is currently generating about -0.16 per unit of risk. If you would invest 41,700 in Microsoft on October 23, 2024 and sell it today you would earn a total of 1,203 from holding Microsoft or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.37% |
| Values | Daily Returns |
Microsoft vs. Green Minerals AS
Performance |
| Timeline |
| Microsoft |
| Green Minerals AS |
Microsoft and Green Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Green Minerals
The main advantage of trading using opposite Microsoft and Green Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Green Minerals 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 Green Minerals will offset losses from the drop in Green Minerals' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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