Correlation Between Microsoft and Kiplin Metals
Can any of the company-specific risk be diversified away by investing in both Microsoft and Kiplin Metals 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 Kiplin Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Kiplin Metals, you can compare the effects of market volatilities on Microsoft and Kiplin Metals 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 Kiplin Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Kiplin Metals.
Diversification Opportunities for Microsoft and Kiplin Metals
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Kiplin is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Kiplin Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiplin Metals 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 Kiplin Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiplin Metals has no effect on the direction of Microsoft i.e., Microsoft and Kiplin Metals go up and down completely randomly.
Pair Corralation between Microsoft and Kiplin Metals
Given the investment horizon of 90 days Microsoft is expected to generate 0.17 times more return on investment than Kiplin Metals. However, Microsoft is 5.74 times less risky than Kiplin Metals. It trades about 0.03 of its potential returns per unit of risk. Kiplin Metals is currently generating about 0.0 per unit of risk. If you would invest 38,737 in Microsoft on November 9, 2024 and sell it today you would earn a total of 2,845 from holding Microsoft or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.25% |
| Values | Daily Returns |
Microsoft vs. Kiplin Metals
Performance |
| Timeline |
| Microsoft |
| Kiplin Metals |
Microsoft and Kiplin Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Kiplin Metals
The main advantage of trading using opposite Microsoft and Kiplin Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Kiplin Metals 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 Kiplin Metals will offset losses from the drop in Kiplin Metals' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Kiplin Metals vs. Arbor Metals Corp | Kiplin Metals vs. Marvel Discovery Corp | Kiplin Metals vs. Fission 30 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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