Correlation Between Microsoft and GCL Global
Can any of the company-specific risk be diversified away by investing in both Microsoft and GCL Global 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 GCL Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and GCL Global Holdings, you can compare the effects of market volatilities on Microsoft and GCL Global 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 GCL Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and GCL Global.
Diversification Opportunities for Microsoft and GCL Global
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and GCL is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and GCL Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCL Global Holdings 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 GCL Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCL Global Holdings has no effect on the direction of Microsoft i.e., Microsoft and GCL Global go up and down completely randomly.
Pair Corralation between Microsoft and GCL Global
Given the investment horizon of 90 days Microsoft is expected to generate 0.06 times more return on investment than GCL Global. However, Microsoft is 15.52 times less risky than GCL Global. It trades about -0.08 of its potential returns per unit of risk. GCL Global Holdings is currently generating about -0.02 per unit of risk. If you would invest 42,398 in Microsoft on December 28, 2024 and sell it today you would lose (3,340) from holding Microsoft or give up 7.88% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Microsoft vs. GCL Global Holdings
Performance |
Timeline |
Microsoft |
GCL Global Holdings |
Microsoft and GCL Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and GCL Global
The main advantage of trading using opposite Microsoft and GCL Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, GCL Global 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 GCL Global will offset losses from the drop in GCL Global's long position.Microsoft vs. Palo Alto Networks | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Zscaler |
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Check out your portfolio center.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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