Correlation Between Microsoft and Triumph Gold

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

By analyzing existing cross correlation between Microsoft and Triumph Gold Corp, you can compare the effects of market volatilities on Microsoft and Triumph Gold 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 Triumph Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Triumph Gold.

Diversification Opportunities for Microsoft and Triumph Gold

0.38

Correlation Coefficient

Microsoft  Triumph Gold

Weak diversification

The 3 months correlation between Microsoft and Triumph is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Triumph Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triumph Gold 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 Triumph Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triumph Gold Corp has no effect on the direction of Microsoft i.e., Microsoft and Triumph Gold go up and down completely randomly.

Pair Corralation between Microsoft and Triumph Gold

Given the investment horizon of 90 days Microsoft is expected to generate 5.06 times less return on investment than Triumph Gold. But when comparing it to its historical volatility, Microsoft is 5.97 times less risky than Triumph Gold. It trades about 0.05 of its potential returns per unit of risk. Triumph Gold Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Triumph Gold Corp on September 14, 2024 and sell it today you would earn a total of  1.00  from holding Triumph Gold Corp or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Triumph Gold Corp

Microsoft

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Triumph Gold Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Triumph Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Triumph Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Triumph Gold

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

The idea behind Microsoft and Triumph Gold Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.