Correlation Between Microsoft and Roscan Gold
Can any of the company-specific risk be diversified away by investing in both Microsoft and Roscan 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 Roscan Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Roscan Gold Corp, you can compare the effects of market volatilities on Microsoft and Roscan 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 Roscan Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Roscan Gold.
Diversification Opportunities for Microsoft and Roscan Gold
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and Roscan is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Roscan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roscan 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 Roscan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roscan Gold Corp has no effect on the direction of Microsoft i.e., Microsoft and Roscan Gold go up and down completely randomly.
Pair Corralation between Microsoft and Roscan Gold
Given the investment horizon of 90 days Microsoft is expected to generate 2.34 times less return on investment than Roscan Gold. But when comparing it to its historical volatility, Microsoft is 6.31 times less risky than Roscan Gold. It trades about 0.04 of its potential returns per unit of risk. Roscan Gold Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 8.90 in Roscan Gold Corp on August 25, 2024 and sell it today you would lose (3.25) from holding Roscan Gold Corp or give up 36.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Roscan Gold Corp
Performance |
| Timeline |
| Microsoft |
| Roscan Gold Corp |
Microsoft and Roscan Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Roscan Gold
The main advantage of trading using opposite Microsoft and Roscan Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Roscan 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 Roscan Gold will offset losses from the drop in Roscan Gold's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Roscan Gold vs. Aurion Resources | Roscan Gold vs. Liberty Gold Corp | Roscan Gold vs. Rio2 Limited | Roscan Gold vs. Orezone Gold 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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