Correlation Between Microsoft and Touchstone Exploration
Can any of the company-specific risk be diversified away by investing in both Microsoft and Touchstone Exploration 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 Touchstone Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Touchstone Exploration, you can compare the effects of market volatilities on Microsoft and Touchstone Exploration 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 Touchstone Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Touchstone Exploration.
Diversification Opportunities for Microsoft and Touchstone Exploration
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Touchstone is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Touchstone Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Exploration 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 Touchstone Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Exploration has no effect on the direction of Microsoft i.e., Microsoft and Touchstone Exploration go up and down completely randomly.
Pair Corralation between Microsoft and Touchstone Exploration
Given the investment horizon of 90 days Microsoft is expected to generate 0.3 times more return on investment than Touchstone Exploration. However, Microsoft is 3.28 times less risky than Touchstone Exploration. It trades about 0.15 of its potential returns per unit of risk. Touchstone Exploration is currently generating about -0.07 per unit of risk. If you would invest 40,955 in Microsoft on September 2, 2024 and sell it today you would earn a total of 1,391 from holding Microsoft or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Touchstone Exploration
Performance |
| Timeline |
| Microsoft |
| Touchstone Exploration |
Microsoft and Touchstone Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Touchstone Exploration
The main advantage of trading using opposite Microsoft and Touchstone Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Touchstone Exploration 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 Touchstone Exploration will offset losses from the drop in Touchstone Exploration's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Touchstone Exploration vs. Headwater Exploration | Touchstone Exploration vs. Gear Energy | Touchstone Exploration vs. Canacol Energy | Touchstone Exploration vs. InPlay Oil 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |