Correlation Between MicroStrategy Incorporated and Silvergate Capital

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

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

Diversification Opportunities for MicroStrategy Incorporated and Silvergate Capital

-0.87

Correlation Coefficient

MicroStrategy Incorporated  Silvergate Capital

Pay attention - limited upside

The 3 months correlation between MicroStrategy and Silvergate is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding MicroStrategy Incorporated and Silvergate Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvergate Capital 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 Silvergate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvergate Capital has no effect on the direction of MicroStrategy Incorporated i.e., MicroStrategy Incorporated and Silvergate Capital go up and down completely randomly.

Pair Corralation between MicroStrategy Incorporated and Silvergate Capital

If you would invest  11,957  in MicroStrategy Incorporated on September 5, 2024 and sell it today you would earn a total of  25,386  from holding MicroStrategy Incorporated or generate 212.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

MicroStrategy Incorporated  vs.  Silvergate Capital

MicroStrategy Incorporated

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MicroStrategy Incorporated are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, MicroStrategy Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Silvergate Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silvergate Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Silvergate Capital is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with MicroStrategy Incorporated and Silvergate Capital

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

The idea behind MicroStrategy Incorporated and Silvergate Capital 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.