Correlation Between Microsoft and Globex Mining

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

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

Diversification Opportunities for Microsoft and Globex Mining

-0.49

Correlation Coefficient

Microsoft  Globex Mining

Very good diversification

The 3 months correlation between Microsoft and Globex is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises 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 Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of Microsoft i.e., Microsoft and Globex Mining go up and down completely randomly.

Pair Corralation between Microsoft and Globex Mining

Assuming the 90 days trading horizon Microsoft is expected to under-perform the Globex Mining. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.43 times less risky than Globex Mining. The stock trades about -0.15 of its potential returns per unit of risk. The Globex Mining Enterprises is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  77.00  in Globex Mining Enterprises on December 24, 2024 and sell it today you would earn a total of  25.00  from holding Globex Mining Enterprises or generate 32.47% return on investment over 90 days.

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

Microsoft  vs.  Globex Mining Enterprises

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Globex Mining Enterprises

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Globex Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Globex Mining

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

The idea behind Microsoft and Globex Mining Enterprises 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.