Correlation Between Microsoft and Grayscale Litecoin
Can any of the company-specific risk be diversified away by investing in both Microsoft and Grayscale Litecoin 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 Grayscale Litecoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Grayscale Litecoin Trust, you can compare the effects of market volatilities on Microsoft and Grayscale Litecoin 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 Grayscale Litecoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Grayscale Litecoin.
Diversification Opportunities for Microsoft and Grayscale Litecoin
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Grayscale is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Grayscale Litecoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Litecoin Trust 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 Grayscale Litecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Litecoin Trust has no effect on the direction of Microsoft i.e., Microsoft and Grayscale Litecoin go up and down completely randomly.
Pair Corralation between Microsoft and Grayscale Litecoin
Given the investment horizon of 90 days Microsoft is expected to generate 15.39 times less return on investment than Grayscale Litecoin. But when comparing it to its historical volatility, Microsoft is 6.36 times less risky than Grayscale Litecoin. It trades about 0.05 of its potential returns per unit of risk. Grayscale Litecoin Trust is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,200 in Grayscale Litecoin Trust on September 15, 2024 and sell it today you would earn a total of 726.00 from holding Grayscale Litecoin Trust or generate 60.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Microsoft vs. Grayscale Litecoin Trust
Performance |
Timeline |
Microsoft |
Grayscale Litecoin Trust |
Microsoft and Grayscale Litecoin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Grayscale Litecoin
The main advantage of trading using opposite Microsoft and Grayscale Litecoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Grayscale Litecoin 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 Grayscale Litecoin will offset losses from the drop in Grayscale Litecoin's long position.Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
Grayscale Litecoin vs. Grayscale Bitcoin Cash | Grayscale Litecoin vs. Grayscale Digital Large | Grayscale Litecoin vs. Grayscale Ethereum Trust | Grayscale Litecoin vs. Bitwise 10 Crypto |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |