Correlation Between Griffin Mining and Microsoft

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

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

Diversification Opportunities for Griffin Mining and Microsoft

-0.74

Correlation Coefficient

Griffin Mining  Microsoft

Pay attention - limited upside

The 3 months correlation between Griffin and Microsoft is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Griffin Mining and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Griffin 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 Griffin 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 Griffin Mining i.e., Griffin Mining and Microsoft go up and down completely randomly.

Pair Corralation between Griffin Mining and Microsoft

Assuming the 90 days trading horizon Griffin Mining is expected to generate 1.27 times more return on investment than Microsoft. However, Griffin Mining is 1.27 times more volatile than Microsoft. It trades about 0.15 of its potential returns per unit of risk. Microsoft is currently generating about -0.05 per unit of risk. If you would invest  14,700  in Griffin Mining on December 25, 2024 and sell it today you would earn a total of  3,800  from holding Griffin Mining or generate 25.85% return on investment over 90 days.

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

Griffin Mining  vs.  Microsoft

Griffin Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Griffin Mining are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Griffin Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Griffin Mining and Microsoft

The main advantage of trading using opposite Griffin Mining and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffin 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 Griffin 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.