Correlation Between Microsoft and Galaxy Entertainment
Can any of the company-specific risk be diversified away by investing in both Microsoft and Galaxy 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 Galaxy Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Galaxy Entertainment Group, you can compare the effects of market volatilities on Microsoft and Galaxy 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 Galaxy Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Galaxy Entertainment.
Diversification Opportunities for Microsoft and Galaxy Entertainment
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Galaxy is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Galaxy Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy 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 Galaxy Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Entertainment has no effect on the direction of Microsoft i.e., Microsoft and Galaxy Entertainment go up and down completely randomly.
Pair Corralation between Microsoft and Galaxy Entertainment
Given the investment horizon of 90 days Microsoft is expected to generate 0.64 times more return on investment than Galaxy Entertainment. However, Microsoft is 1.57 times less risky than Galaxy Entertainment. It trades about -0.04 of its potential returns per unit of risk. Galaxy Entertainment Group is currently generating about -0.04 per unit of risk. If you would invest 42,388 in Microsoft on August 25, 2024 and sell it today you would lose (688.00) from holding Microsoft or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Galaxy Entertainment Group
Performance |
| Timeline |
| Microsoft |
| Galaxy Entertainment |
Microsoft and Galaxy Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Galaxy Entertainment
The main advantage of trading using opposite Microsoft and Galaxy Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Galaxy 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 Galaxy Entertainment will offset losses from the drop in Galaxy Entertainment's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Galaxy Entertainment vs. SJM Holdings Ltd | Galaxy Entertainment vs. Studio City International | Galaxy Entertainment vs. Monarch Casino Resort | Galaxy Entertainment vs. Playa Hotels Resorts |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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