Correlation Between Microsoft and Stakeholder Gold

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

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

Diversification Opportunities for Microsoft and Stakeholder Gold

0.08

Correlation Coefficient

Microsoft  Stakeholder Gold

Significant diversification

The 3 months correlation between Microsoft and Stakeholder is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Stakeholder Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stakeholder Gold Corp 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 Stakeholder Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stakeholder Gold Corp has no effect on the direction of Microsoft i.e., Microsoft and Stakeholder Gold go up and down completely randomly.

Pair Corralation between Microsoft and Stakeholder Gold

Given the investment horizon of 90 days Microsoft is expected to under-perform the Stakeholder Gold. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.56 times less risky than Stakeholder Gold. The stock trades about -0.11 of its potential returns per unit of risk. The Stakeholder Gold Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Stakeholder Gold Corp on December 25, 2024 and sell it today you would earn a total of  1.00  from holding Stakeholder Gold Corp or generate 1.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Microsoft  vs.  Stakeholder Gold Corp

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.

Stakeholder Gold Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stakeholder Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Stakeholder Gold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Microsoft and Stakeholder Gold

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

The idea behind Microsoft and Stakeholder Gold Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.