Correlation Between Microsoft and Magellan Gold
Can any of the company-specific risk be diversified away by investing in both Microsoft and Magellan 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 Magellan Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Magellan Gold Corp, you can compare the effects of market volatilities on Microsoft and Magellan 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 Magellan Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Magellan Gold.
Diversification Opportunities for Microsoft and Magellan Gold
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Magellan is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Magellan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan 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 Magellan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Gold Corp has no effect on the direction of Microsoft i.e., Microsoft and Magellan Gold go up and down completely randomly.
Pair Corralation between Microsoft and Magellan Gold
Given the investment horizon of 90 days Microsoft is expected to generate 18.55 times less return on investment than Magellan Gold. But when comparing it to its historical volatility, Microsoft is 5.38 times less risky than Magellan Gold. It trades about 0.01 of its potential returns per unit of risk. Magellan Gold Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Magellan Gold Corp on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Magellan Gold Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Magellan Gold Corp
Performance |
| Timeline |
| Microsoft |
| Magellan Gold Corp |
Microsoft and Magellan Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Magellan Gold
The main advantage of trading using opposite Microsoft and Magellan Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Magellan 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 Magellan Gold will offset losses from the drop in Magellan Gold'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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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