Correlation Between Microsoft and Brightrock Gold

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

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

Diversification Opportunities for Microsoft and Brightrock Gold

-0.49

Correlation Coefficient

Microsoft  Brightrock Gold

Very good diversification

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

Pair Corralation between Microsoft and Brightrock Gold

Given the investment horizon of 90 days Microsoft is expected to generate 0.18 times more return on investment than Brightrock Gold. However, Microsoft is 5.53 times less risky than Brightrock Gold. It trades about 0.11 of its potential returns per unit of risk. Brightrock Gold Corp is currently generating about 0.0 per unit of risk. If you would invest  22,130  in Microsoft on September 27, 2024 and sell it today you would earn a total of  21,803  from holding Microsoft or generate 98.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Microsoft  vs.  Brightrock Gold Corp

Microsoft

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Brightrock Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brightrock Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Microsoft and Brightrock Gold

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

The idea behind Microsoft and Brightrock Gold Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.