Correlation Between Microsoft and Coliseum Acquisition
Can any of the company-specific risk be diversified away by investing in both Microsoft and Coliseum Acquisition 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 Coliseum Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Coliseum Acquisition Corp, you can compare the effects of market volatilities on Microsoft and Coliseum Acquisition 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 Coliseum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Coliseum Acquisition.
Diversification Opportunities for Microsoft and Coliseum Acquisition
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Coliseum is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Coliseum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coliseum Acquisition 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 Coliseum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coliseum Acquisition Corp has no effect on the direction of Microsoft i.e., Microsoft and Coliseum Acquisition go up and down completely randomly.
Pair Corralation between Microsoft and Coliseum Acquisition
Given the investment horizon of 90 days Microsoft is expected to generate 85.89 times less return on investment than Coliseum Acquisition. But when comparing it to its historical volatility, Microsoft is 29.99 times less risky than Coliseum Acquisition. It trades about 0.19 of its potential returns per unit of risk. Coliseum Acquisition Corp is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest 4.20 in Coliseum Acquisition Corp on September 1, 2024 and sell it today you would earn a total of 6.80 from holding Coliseum Acquisition Corp or generate 161.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 33.33% |
| Values | Daily Returns |
Microsoft vs. Coliseum Acquisition Corp
Performance |
| Timeline |
| Microsoft |
| Coliseum Acquisition Corp |
Microsoft and Coliseum Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Coliseum Acquisition
The main advantage of trading using opposite Microsoft and Coliseum Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Coliseum Acquisition 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 Coliseum Acquisition will offset losses from the drop in Coliseum Acquisition's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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..
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