Correlation Between Microsoft and Surge Battery
Can any of the company-specific risk be diversified away by investing in both Microsoft and Surge Battery 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 Surge Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Surge Battery Metals, you can compare the effects of market volatilities on Microsoft and Surge Battery 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 Surge Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Surge Battery.
Diversification Opportunities for Microsoft and Surge Battery
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and Surge is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Surge Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Battery Metals 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 Surge Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Battery Metals has no effect on the direction of Microsoft i.e., Microsoft and Surge Battery go up and down completely randomly.
Pair Corralation between Microsoft and Surge Battery
Given the investment horizon of 90 days Microsoft is expected to under-perform the Surge Battery. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.06 times less risky than Surge Battery. The stock trades about -0.07 of its potential returns per unit of risk. The Surge Battery Metals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Surge Battery Metals on November 7, 2024 and sell it today you would lose (1.00) from holding Surge Battery Metals or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Surge Battery Metals
Performance |
| Timeline |
| Microsoft |
| Surge Battery Metals |
Microsoft and Surge Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Surge Battery
The main advantage of trading using opposite Microsoft and Surge Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Surge Battery 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 Surge Battery will offset losses from the drop in Surge Battery's long position.| Microsoft vs. Crowdstrike Holdings | Microsoft vs. Okta Inc | Microsoft vs. Cloudflare | Microsoft vs. MongoDB |
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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 Stocks Directory module to find actively traded stocks across global markets.
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