Correlation Between Microsoft and Magellan Energy
Can any of the company-specific risk be diversified away by investing in both Microsoft and Magellan Energy 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 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Magellan Energy, you can compare the effects of market volatilities on Microsoft and Magellan Energy 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 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Magellan Energy.
Diversification Opportunities for Microsoft and Magellan Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and Magellan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Magellan Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Energy 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 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Energy has no effect on the direction of Microsoft i.e., Microsoft and Magellan Energy go up and down completely randomly.
Pair Corralation between Microsoft and Magellan Energy
If you would invest 37,986 in Microsoft on August 24, 2024 and sell it today you would earn a total of 3,262 from holding Microsoft or generate 8.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Microsoft vs. Magellan Energy
Performance |
| Timeline |
| Microsoft |
| Magellan Energy |
Microsoft and Magellan Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Magellan Energy
The main advantage of trading using opposite Microsoft and Magellan Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Magellan Energy 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 Energy will offset losses from the drop in Magellan Energy's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Magellan Energy vs. Tiger Oil And | Magellan Energy vs. Black Dragon Resource | Magellan Energy vs. MMEX Resources Corp | Magellan Energy vs. Liberty Energy 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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