Correlation Between Microsoft and Golden Ocean
Can any of the company-specific risk be diversified away by investing in both Microsoft and Golden Ocean 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 Ocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Golden Ocean Group, you can compare the effects of market volatilities on Microsoft and Golden Ocean 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 Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Golden Ocean.
Diversification Opportunities for Microsoft and Golden Ocean
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Golden is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Golden Ocean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Ocean Group 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 Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Ocean Group has no effect on the direction of Microsoft i.e., Microsoft and Golden Ocean go up and down completely randomly.
Pair Corralation between Microsoft and Golden Ocean
Given the investment horizon of 90 days Microsoft is expected to generate 1.35 times less return on investment than Golden Ocean. But when comparing it to its historical volatility, Microsoft is 1.65 times less risky than Golden Ocean. It trades about 0.07 of its potential returns per unit of risk. Golden Ocean Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,092 in Golden Ocean Group on August 29, 2024 and sell it today you would earn a total of 4,153 from holding Golden Ocean Group or generate 51.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.75% |
| Values | Daily Returns |
Microsoft vs. Golden Ocean Group
Performance |
| Timeline |
| Microsoft |
| Golden Ocean Group |
Microsoft and Golden Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Golden Ocean
The main advantage of trading using opposite Microsoft and Golden Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Golden Ocean 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 Ocean will offset losses from the drop in Golden Ocean's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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