Correlation Between Microsoft and Golden Pursuit

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

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

Diversification Opportunities for Microsoft and Golden Pursuit

-0.45

Correlation Coefficient

Microsoft  Golden Pursuit

Very good diversification

The 3 months correlation between Microsoft and Golden is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Golden Pursuit Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Pursuit Resources 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 Golden Pursuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Pursuit Resources has no effect on the direction of Microsoft i.e., Microsoft and Golden Pursuit go up and down completely randomly.

Pair Corralation between Microsoft and Golden Pursuit

Given the investment horizon of 90 days Microsoft is expected to under-perform the Golden Pursuit. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.81 times less risky than Golden Pursuit. The stock trades about -0.11 of its potential returns per unit of risk. The Golden Pursuit Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Golden Pursuit Resources on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Golden Pursuit Resources or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Microsoft  vs.  Golden Pursuit Resources

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.

Golden Pursuit Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Pursuit Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Golden Pursuit may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Microsoft and Golden Pursuit

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

The idea behind Microsoft and Golden Pursuit Resources 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.