Correlation Between Microsoft and Broadmark Realty

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

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

Diversification Opportunities for Microsoft and Broadmark Realty

0.0

Correlation Coefficient

Microsoft  Broadmark Realty

Pay attention - limited upside

The 3 months correlation between Microsoft and Broadmark is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Broadmark Realty Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadmark Realty Capital 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 Broadmark Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadmark Realty Capital has no effect on the direction of Microsoft i.e., Microsoft and Broadmark Realty go up and down completely randomly.

Pair Corralation between Microsoft and Broadmark Realty

If you would invest (100.00) in Broadmark Realty Capital on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Broadmark Realty Capital or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Microsoft  vs.  Broadmark Realty Capital

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 abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Broadmark Realty Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Broadmark Realty Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Broadmark Realty is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Microsoft and Broadmark Realty

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

The idea behind Microsoft and Broadmark Realty Capital 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.