Correlation Between MicroStrategy Incorporated and Copper

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

By analyzing existing cross correlation between MicroStrategy Incorporated and Copper, you can compare the effects of market volatilities on MicroStrategy Incorporated and Copper 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 MicroStrategy Incorporated with a short position of Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroStrategy Incorporated and Copper.

Diversification Opportunities for MicroStrategy Incorporated and Copper

-0.7

Correlation Coefficient

MicroStrategy Incorporated  Copper

Excellent diversification

The 3 months correlation between MicroStrategy and Copper is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding MicroStrategy Incorporated and Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper and MicroStrategy Incorporated 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 MicroStrategy Incorporated are associated (or correlated) with Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper has no effect on the direction of MicroStrategy Incorporated i.e., MicroStrategy Incorporated and Copper go up and down completely randomly.

Pair Corralation between MicroStrategy Incorporated and Copper

Given the investment horizon of 90 days MicroStrategy Incorporated is expected to generate 4.76 times more return on investment than Copper. However, MicroStrategy Incorporated is 4.76 times more volatile than Copper. It trades about 0.28 of its potential returns per unit of risk. Copper is currently generating about 0.01 per unit of risk. If you would invest  14,147  in MicroStrategy Incorporated on September 13, 2024 and sell it today you would earn a total of  26,993  from holding MicroStrategy Incorporated or generate 190.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

MicroStrategy Incorporated  vs.  Copper

MicroStrategy Incorporated

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MicroStrategy Incorporated are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, MicroStrategy Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Copper is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MicroStrategy Incorporated and Copper

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

The idea behind MicroStrategy Incorporated and Copper 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.