Correlation Between Microsoft and Stelmine Canada
Can any of the company-specific risk be diversified away by investing in both Microsoft and Stelmine Canada 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 Stelmine Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Stelmine Canada, you can compare the effects of market volatilities on Microsoft and Stelmine Canada 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 Stelmine Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Stelmine Canada.
Diversification Opportunities for Microsoft and Stelmine Canada
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Stelmine is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Stelmine Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelmine Canada 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 Stelmine Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelmine Canada has no effect on the direction of Microsoft i.e., Microsoft and Stelmine Canada go up and down completely randomly.
Pair Corralation between Microsoft and Stelmine Canada
Given the investment horizon of 90 days Microsoft is expected to generate 0.1 times more return on investment than Stelmine Canada. However, Microsoft is 9.62 times less risky than Stelmine Canada. It trades about 0.19 of its potential returns per unit of risk. Stelmine Canada is currently generating about -0.01 per unit of risk. If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Stelmine Canada
Performance |
| Timeline |
| Microsoft |
| Stelmine Canada |
Microsoft and Stelmine Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Stelmine Canada
The main advantage of trading using opposite Microsoft and Stelmine Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Stelmine Canada 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 Stelmine Canada will offset losses from the drop in Stelmine Canada's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Stelmine Canada vs. ATT Inc | Stelmine Canada vs. Merck Company | Stelmine Canada vs. Walt Disney | Stelmine Canada vs. Caterpillar |
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 Directory module to find actively traded commodities issued by global exchanges.
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