Correlation Between Microsoft and Marijuana
Can any of the company-specific risk be diversified away by investing in both Microsoft and Marijuana 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 Marijuana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Marijuana, you can compare the effects of market volatilities on Microsoft and Marijuana 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 Marijuana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Marijuana.
Diversification Opportunities for Microsoft and Marijuana
Pay attention - limited upside
The 3 months correlation between Microsoft and Marijuana is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Marijuana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marijuana 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 Marijuana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marijuana has no effect on the direction of Microsoft i.e., Microsoft and Marijuana go up and down completely randomly.
Pair Corralation between Microsoft and Marijuana
Given the investment horizon of 90 days Microsoft is expected to generate 179.5 times less return on investment than Marijuana. But when comparing it to its historical volatility, Microsoft is 96.25 times less risky than Marijuana. It trades about 0.09 of its potential returns per unit of risk. Marijuana is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Marijuana on August 30, 2024 and sell it today you would lose (0.01) from holding Marijuana or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Marijuana
Performance |
| Timeline |
| Microsoft |
| Marijuana |
Microsoft and Marijuana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Marijuana
The main advantage of trading using opposite Microsoft and Marijuana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Marijuana 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 Marijuana will offset losses from the drop in Marijuana's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Marijuana vs. Priority Aviation | Marijuana vs. Cbd Life Sciences | Marijuana vs. Hemp Inc | Marijuana vs. Emergent Health 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Commodity Directory Find actively traded commodities issued by global exchanges |