Correlation Between Silvergate Capital and MicroStrategy Incorporated

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

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

Diversification Opportunities for Silvergate Capital and MicroStrategy Incorporated

0.0

Correlation Coefficient

Silvergate Capital  MicroStrategy Incorporated

Pay attention - limited upside

The 3 months correlation between Silvergate and MicroStrategy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Silvergate Capital and MicroStrategy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroStrategy Incorporated and Silvergate Capital 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 Silvergate Capital are associated (or correlated) with MicroStrategy Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroStrategy Incorporated has no effect on the direction of Silvergate Capital i.e., Silvergate Capital and MicroStrategy Incorporated go up and down completely randomly.

Pair Corralation between Silvergate Capital and MicroStrategy Incorporated

If you would invest  33,223  in MicroStrategy Incorporated on December 23, 2024 and sell it today you would lose (2,823) from holding MicroStrategy Incorporated or give up 8.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Silvergate Capital  vs.  MicroStrategy Incorporated

Silvergate Capital

Risk-Adjusted Performance

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.

MicroStrategy Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days MicroStrategy Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, MicroStrategy Incorporated is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Silvergate Capital and MicroStrategy Incorporated

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

The idea behind Silvergate Capital and MicroStrategy Incorporated 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.