Correlation Between Antofagasta PLC and Microsoft
Can any of the company-specific risk be diversified away by investing in both Antofagasta PLC and Microsoft 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 Antofagasta PLC and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Antofagasta PLC and Microsoft, you can compare the effects of market volatilities on Antofagasta PLC and Microsoft 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 Antofagasta PLC with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antofagasta PLC and Microsoft.
Diversification Opportunities for Antofagasta PLC and Microsoft
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Antofagasta and Microsoft is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Antofagasta PLC and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Antofagasta PLC 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 Antofagasta PLC are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Antofagasta PLC i.e., Antofagasta PLC and Microsoft go up and down completely randomly.
Pair Corralation between Antofagasta PLC and Microsoft
Assuming the 90 days horizon Antofagasta PLC is expected to generate 1.91 times more return on investment than Microsoft. However, Antofagasta PLC is 1.91 times more volatile than Microsoft. It trades about 0.05 of its potential returns per unit of risk. Microsoft is currently generating about 0.06 per unit of risk. If you would invest 1,633 in Antofagasta PLC on January 26, 2024 and sell it today you would earn a total of 1,107 from holding Antofagasta PLC or generate 67.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.34% |
| Values | Daily Returns |
Antofagasta PLC vs. Microsoft
Performance |
| Timeline |
| Antofagasta PLC |
| Microsoft |
Antofagasta PLC and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Antofagasta PLC and Microsoft
The main advantage of trading using opposite Antofagasta PLC and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antofagasta PLC position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| Antofagasta PLC vs. Imperial Metals | Antofagasta PLC vs. Bell Copper | Antofagasta PLC vs. Copper Fox Metals | Antofagasta PLC vs. Nevada Copper Corp |
| Microsoft vs. Crowdstrike Holdings | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Cloudflare |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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