Correlation Between Coeur Mining and Microsoft

Can any of the company-specific risk be diversified away by investing in both Coeur Mining and Microsoft 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 Coeur Mining and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coeur Mining and Microsoft, you can compare the effects of market volatilities on Coeur Mining and Microsoft 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 Coeur Mining with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coeur Mining and Microsoft.

Diversification Opportunities for Coeur Mining and Microsoft

-0.3

Correlation Coefficient

Coeur Mining  Microsoft

Very good diversification

The 3 months correlation between Coeur and Microsoft is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Coeur Mining and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Coeur Mining 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 Coeur Mining are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Coeur Mining i.e., Coeur Mining and Microsoft go up and down completely randomly.

Pair Corralation between Coeur Mining and Microsoft

Assuming the 90 days horizon Coeur Mining is expected to under-perform the Microsoft. But the stock apears to be less risky and, when comparing its historical volatility, Coeur Mining is 1.24 times less risky than Microsoft. The stock trades about -0.11 of its potential returns per unit of risk. The Microsoft is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  37,995  in Microsoft on October 4, 2024 and sell it today you would earn a total of  2,855  from holding Microsoft or generate 7.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Coeur Mining  vs.  Microsoft

Coeur Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coeur Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Microsoft

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Coeur Mining and Microsoft

The main advantage of trading using opposite Coeur Mining and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coeur Mining position performs unexpectedly, Microsoft 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 will offset losses from the drop in Microsoft's long position.

The idea behind Coeur Mining and Microsoft pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.