Correlation Between Microsoft and Nicola Mining
Can any of the company-specific risk be diversified away by investing in both Microsoft and Nicola Mining 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 Nicola Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Nicola Mining, you can compare the effects of market volatilities on Microsoft and Nicola Mining 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 Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Nicola Mining.
Diversification Opportunities for Microsoft and Nicola Mining
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Nicola is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining 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 Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of Microsoft i.e., Microsoft and Nicola Mining go up and down completely randomly.
Pair Corralation between Microsoft and Nicola Mining
Given the investment horizon of 90 days Microsoft is expected to generate 0.34 times more return on investment than Nicola Mining. However, Microsoft is 2.92 times less risky than Nicola Mining. It trades about -0.04 of its potential returns per unit of risk. Nicola Mining is currently generating about -0.06 per unit of risk. If you would invest 43,167 in Microsoft on August 31, 2024 and sell it today you would lose (868.00) from holding Microsoft or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Nicola Mining
Performance |
| Timeline |
| Microsoft |
| Nicola Mining |
Microsoft and Nicola Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Nicola Mining
The main advantage of trading using opposite Microsoft and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Nicola Mining 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 Nicola Mining will offset losses from the drop in Nicola Mining's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Nicola Mining vs. Liontown Resources Limited | Nicola Mining vs. ATT Inc | Nicola Mining vs. Merck Company | Nicola Mining vs. Walt Disney |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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