Correlation Between Microsoft and Kelt Exploration
Can any of the company-specific risk be diversified away by investing in both Microsoft and Kelt Exploration 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 Kelt Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Kelt Exploration, you can compare the effects of market volatilities on Microsoft and Kelt Exploration 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 Kelt Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Kelt Exploration.
Diversification Opportunities for Microsoft and Kelt Exploration
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Kelt is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Kelt Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelt Exploration 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 Kelt Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelt Exploration has no effect on the direction of Microsoft i.e., Microsoft and Kelt Exploration go up and down completely randomly.
Pair Corralation between Microsoft and Kelt Exploration
Given the investment horizon of 90 days Microsoft is expected to generate 5.29 times less return on investment than Kelt Exploration. But when comparing it to its historical volatility, Microsoft is 1.75 times less risky than Kelt Exploration. It trades about 0.01 of its potential returns per unit of risk. Kelt Exploration is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 619.00 in Kelt Exploration on August 28, 2024 and sell it today you would earn a total of 61.00 from holding Kelt Exploration or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Microsoft vs. Kelt Exploration
Performance |
| Timeline |
| Microsoft |
| Kelt Exploration |
Microsoft and Kelt Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Kelt Exploration
The main advantage of trading using opposite Microsoft and Kelt Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Kelt Exploration 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 Kelt Exploration will offset losses from the drop in Kelt Exploration'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 CEOs Directory module to screen CEOs from public companies around the world.
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