Correlation Between Microsoft and Klondike Gold
Can any of the company-specific risk be diversified away by investing in both Microsoft and Klondike Gold 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 Klondike Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Klondike Gold Corp, you can compare the effects of market volatilities on Microsoft and Klondike Gold 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 Klondike Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Klondike Gold.
Diversification Opportunities for Microsoft and Klondike Gold
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and Klondike is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Klondike Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klondike Gold Corp 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 Klondike Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klondike Gold Corp has no effect on the direction of Microsoft i.e., Microsoft and Klondike Gold go up and down completely randomly.
Pair Corralation between Microsoft and Klondike Gold
Given the investment horizon of 90 days Microsoft is expected to generate 1.15 times less return on investment than Klondike Gold. But when comparing it to its historical volatility, Microsoft is 5.08 times less risky than Klondike Gold. It trades about 0.08 of its potential returns per unit of risk. Klondike Gold Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Klondike Gold Corp on November 9, 2024 and sell it today you would lose (5.00) from holding Klondike Gold Corp or give up 41.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Microsoft vs. Klondike Gold Corp
Performance |
| Timeline |
| Microsoft |
| Klondike Gold Corp |
Microsoft and Klondike Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Klondike Gold
The main advantage of trading using opposite Microsoft and Klondike Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Klondike Gold 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 Klondike Gold will offset losses from the drop in Klondike Gold's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Klondike Gold vs. Golden Goliath Resources | Klondike Gold vs. Minera Alamos | Klondike Gold vs. Klondike Silver Corp | Klondike Gold vs. Metallic Minerals Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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