Correlation Between Microsoft and Newport Gold
Can any of the company-specific risk be diversified away by investing in both Microsoft and Newport 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 Newport Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Newport Gold, you can compare the effects of market volatilities on Microsoft and Newport 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 Newport Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Newport Gold.
Diversification Opportunities for Microsoft and Newport Gold
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Newport is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Newport Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newport Gold 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 Newport Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newport Gold has no effect on the direction of Microsoft i.e., Microsoft and Newport Gold go up and down completely randomly.
Pair Corralation between Microsoft and Newport Gold
Given the investment horizon of 90 days Microsoft is expected to generate 0.24 times more return on investment than Newport Gold. However, Microsoft is 4.13 times less risky than Newport Gold. It trades about -0.21 of its potential returns per unit of risk. Newport Gold is currently generating about -0.21 per unit of risk. If you would invest 41,416 in Microsoft on December 1, 2024 and sell it today you would lose (1,717) from holding Microsoft or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Newport Gold
Performance |
| Timeline |
| Microsoft |
| Newport Gold |
Microsoft and Newport Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Newport Gold
The main advantage of trading using opposite Microsoft and Newport Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Newport 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 Newport Gold will offset losses from the drop in Newport Gold's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Newport Gold vs. Callinex Mines | Newport Gold vs. NioCorp Developments Ltd | Newport Gold vs. Lithium Americas Corp | Newport Gold vs. Sigma Lithium Resources |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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