Correlation Between Microsoft and Capstone Mining
Can any of the company-specific risk be diversified away by investing in both Microsoft and Capstone Mining 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 Capstone Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Capstone Mining Corp, you can compare the effects of market volatilities on Microsoft and Capstone Mining 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 Capstone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Capstone Mining.
Diversification Opportunities for Microsoft and Capstone Mining
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Microsoft and Capstone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Capstone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Mining 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 Capstone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Mining Corp has no effect on the direction of Microsoft i.e., Microsoft and Capstone Mining go up and down completely randomly.
Pair Corralation between Microsoft and Capstone Mining
Given the investment horizon of 90 days Microsoft is expected to generate 0.52 times more return on investment than Capstone Mining. However, Microsoft is 1.93 times less risky than Capstone Mining. It trades about 0.36 of its potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.13 per unit of risk. If you would invest 38,659 in Microsoft on April 24, 2025 and sell it today you would earn a total of 11,868 from holding Microsoft or generate 30.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.39% |
Values | Daily Returns |
Microsoft vs. Capstone Mining Corp
Performance |
Timeline |
Microsoft |
Capstone Mining Corp |
Microsoft and Capstone Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Capstone Mining
The main advantage of trading using opposite Microsoft and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Capstone Mining 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 Capstone Mining will offset losses from the drop in Capstone Mining's long position.Microsoft vs. Palantir Technologies Class | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Oracle | Microsoft vs. CoreWeave, Class A |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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