Correlation Between Microsoft and VanEck Uranium

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

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

Diversification Opportunities for Microsoft and VanEck Uranium

0.57

Correlation Coefficient

Microsoft  VanEck Uranium

Very weak diversification

The 3 months correlation between Microsoft and VanEck is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and VanEck Uranium and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Uranium 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 VanEck Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Uranium has no effect on the direction of Microsoft i.e., Microsoft and VanEck Uranium go up and down completely randomly.

Pair Corralation between Microsoft and VanEck Uranium

Given the investment horizon of 90 days Microsoft is expected to generate 0.62 times more return on investment than VanEck Uranium. However, Microsoft is 1.6 times less risky than VanEck Uranium. It trades about -0.11 of its potential returns per unit of risk. VanEck Uranium and is currently generating about -0.08 per unit of risk. If you would invest  42,398  in Microsoft on December 30, 2024 and sell it today you would lose (4,518) from holding Microsoft or give up 10.66% of portfolio value over 90 days.

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

Microsoft  vs.  VanEck Uranium and

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.

VanEck Uranium

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Uranium and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Pair Trading with Microsoft and VanEck Uranium

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

The idea behind Microsoft and VanEck Uranium and 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.