Correlation Between Microsoft and Golden House
Can any of the company-specific risk be diversified away by investing in both Microsoft and Golden House 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 House into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Golden House, you can compare the effects of market volatilities on Microsoft and Golden House 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 House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Golden House.
Diversification Opportunities for Microsoft and Golden House
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Golden is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Golden House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden House 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 House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden House has no effect on the direction of Microsoft i.e., Microsoft and Golden House go up and down completely randomly.
Pair Corralation between Microsoft and Golden House
Given the investment horizon of 90 days Microsoft is expected to generate 27.07 times less return on investment than Golden House. But when comparing it to its historical volatility, Microsoft is 2.16 times less risky than Golden House. It trades about 0.01 of its potential returns per unit of risk. Golden House is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 197,787 in Golden House on October 24, 2024 and sell it today you would earn a total of 32,113 from holding Golden House or generate 16.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.78% |
| Values | Daily Returns |
Microsoft vs. Golden House
Performance |
| Timeline |
| Microsoft |
| Golden House |
Microsoft and Golden House Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Golden House
The main advantage of trading using opposite Microsoft and Golden House positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Golden House 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 House will offset losses from the drop in Golden House's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
| Golden House vs. Hanan Mor | Golden House vs. IBI Inv House | Golden House vs. E M Computing | Golden House vs. Alony Hetz Properties |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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