Correlation Between SPoT Coffee and Microsoft Corp
Can any of the company-specific risk be diversified away by investing in both SPoT Coffee and Microsoft Corp 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 SPoT Coffee and Microsoft Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPoT Coffee and Microsoft Corp CDR, you can compare the effects of market volatilities on SPoT Coffee and Microsoft Corp 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 SPoT Coffee with a short position of Microsoft Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPoT Coffee and Microsoft Corp.
Diversification Opportunities for SPoT Coffee and Microsoft Corp
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SPoT and Microsoft is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPoT Coffee and Microsoft Corp CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft Corp CDR and SPoT Coffee 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 SPoT Coffee are associated (or correlated) with Microsoft Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft Corp CDR has no effect on the direction of SPoT Coffee i.e., SPoT Coffee and Microsoft Corp go up and down completely randomly.
Pair Corralation between SPoT Coffee and Microsoft Corp
Assuming the 90 days horizon SPoT Coffee is expected to generate 6.32 times more return on investment than Microsoft Corp. However, SPoT Coffee is 6.32 times more volatile than Microsoft Corp CDR. It trades about 0.02 of its potential returns per unit of risk. Microsoft Corp CDR is currently generating about 0.08 per unit of risk. If you would invest 6.00 in SPoT Coffee on August 30, 2024 and sell it today you would lose (4.50) from holding SPoT Coffee or give up 75.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPoT Coffee vs. Microsoft Corp CDR
Performance |
| Timeline |
| SPoT Coffee |
| Microsoft Corp CDR |
SPoT Coffee and Microsoft Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPoT Coffee and Microsoft Corp
The main advantage of trading using opposite SPoT Coffee and Microsoft Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPoT Coffee position performs unexpectedly, Microsoft Corp 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 Microsoft Corp will offset losses from the drop in Microsoft Corp's long position.| SPoT Coffee vs. Eros Resources Corp | SPoT Coffee vs. Apple Inc CDR | SPoT Coffee vs. European Residential Real | SPoT Coffee vs. Canadian Utilities Ltd |
| Microsoft Corp vs. Berkshire Hathaway CDR | Microsoft Corp vs. JPMorgan Chase Co | Microsoft Corp vs. Bank of America | Microsoft Corp vs. Alphabet Inc CDR |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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