Correlation Between Microsoft and CSN Minerao
Can any of the company-specific risk be diversified away by investing in both Microsoft and CSN Minerao 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 CSN Minerao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CSN Minerao SA, you can compare the effects of market volatilities on Microsoft and CSN Minerao 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 CSN Minerao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CSN Minerao.
Diversification Opportunities for Microsoft and CSN Minerao
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and CSN is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CSN Minerao SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSN Minerao SA 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 CSN Minerao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSN Minerao SA has no effect on the direction of Microsoft i.e., Microsoft and CSN Minerao go up and down completely randomly.
Pair Corralation between Microsoft and CSN Minerao
Assuming the 90 days trading horizon Microsoft is expected to generate 0.55 times more return on investment than CSN Minerao. However, Microsoft is 1.81 times less risky than CSN Minerao. It trades about 0.09 of its potential returns per unit of risk. CSN Minerao SA is currently generating about 0.05 per unit of risk. If you would invest 8,706 in Microsoft on September 3, 2024 and sell it today you would earn a total of 1,788 from holding Microsoft or generate 20.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.33% |
| Values | Daily Returns |
Microsoft vs. CSN Minerao SA
Performance |
| Timeline |
| Microsoft |
| CSN Minerao SA |
Microsoft and CSN Minerao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and CSN Minerao
The main advantage of trading using opposite Microsoft and CSN Minerao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CSN Minerao 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 CSN Minerao will offset losses from the drop in CSN Minerao's long position.| Microsoft vs. Prudential Financial | Microsoft vs. GP Investments | Microsoft vs. Broadcom | Microsoft vs. Bread Financial Holdings |
| CSN Minerao vs. Razen SA | CSN Minerao vs. Caixa Seguridade Participaes | CSN Minerao vs. Mliuz SA | CSN Minerao vs. Companhia Paranaense de |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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