Correlation Between Microsoft and Mayfair Gold
Can any of the company-specific risk be diversified away by investing in both Microsoft and Mayfair 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 Mayfair Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Mayfair Gold Corp, you can compare the effects of market volatilities on Microsoft and Mayfair 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 Mayfair Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Mayfair Gold.
Diversification Opportunities for Microsoft and Mayfair Gold
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Mayfair is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Mayfair Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfair 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 Mayfair Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfair Gold Corp has no effect on the direction of Microsoft i.e., Microsoft and Mayfair Gold go up and down completely randomly.
Pair Corralation between Microsoft and Mayfair Gold
Given the investment horizon of 90 days Microsoft is expected to generate 0.6 times more return on investment than Mayfair Gold. However, Microsoft is 1.68 times less risky than Mayfair Gold. It trades about 0.08 of its potential returns per unit of risk. Mayfair Gold Corp is currently generating about 0.01 per unit of risk. If you would invest 24,470 in Microsoft on November 29, 2024 and sell it today you would earn a total of 15,503 from holding Microsoft or generate 63.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Microsoft vs. Mayfair Gold Corp
Performance |
| Timeline |
| Microsoft |
| Mayfair Gold Corp |
Microsoft and Mayfair Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Mayfair Gold
The main advantage of trading using opposite Microsoft and Mayfair Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Mayfair 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 Mayfair Gold will offset losses from the drop in Mayfair Gold's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Mayfair Gold vs. Galway Metals | Mayfair Gold vs. Fireweed Zinc | Mayfair Gold vs. Montage Gold Corp | Mayfair Gold vs. Novo Resources 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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