Correlation Between Microsoft and Aloro Mining
Can any of the company-specific risk be diversified away by investing in both Microsoft and Aloro Mining 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 Aloro Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Aloro Mining Corp, you can compare the effects of market volatilities on Microsoft and Aloro Mining 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 Aloro Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Aloro Mining.
Diversification Opportunities for Microsoft and Aloro Mining
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Aloro is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Aloro Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aloro Mining 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 Aloro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aloro Mining Corp has no effect on the direction of Microsoft i.e., Microsoft and Aloro Mining go up and down completely randomly.
Pair Corralation between Microsoft and Aloro Mining
Given the investment horizon of 90 days Microsoft is expected to generate 2.13 times more return on investment than Aloro Mining. However, Microsoft is 2.13 times more volatile than Aloro Mining Corp. It trades about 0.28 of its potential returns per unit of risk. Aloro Mining Corp is currently generating about 0.21 per unit of risk. If you would invest 42,218 in Microsoft on September 13, 2024 and sell it today you would earn a total of 2,681 from holding Microsoft or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Aloro Mining Corp
Performance |
| Timeline |
| Microsoft |
| Aloro Mining Corp |
Microsoft and Aloro Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Aloro Mining
The main advantage of trading using opposite Microsoft and Aloro Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Aloro Mining 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 Aloro Mining will offset losses from the drop in Aloro Mining's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Aloro Mining vs. Antioquia Gold | Aloro Mining vs. Antilles Gold Limited | Aloro Mining vs. Asante Gold | Aloro Mining vs. Bluestone 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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