Correlation Between Microsoft Corp and Teucrium Corn

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Can any of the company-specific risk be diversified away by investing in both Microsoft Corp and Teucrium Corn 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 Corp and Teucrium Corn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft Corp and Teucrium Corn, you can compare the effects of market volatilities on Microsoft Corp and Teucrium Corn 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 Corp with a short position of Teucrium Corn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Teucrium Corn.

Diversification Opportunities for Microsoft Corp and Teucrium Corn

-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between Microsoft and Teucrium is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp and Teucrium Corn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teucrium Corn and Microsoft Corp 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 Corp are associated (or correlated) with Teucrium Corn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teucrium Corn has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Teucrium Corn go up and down completely randomly.

Pair Corralation between Microsoft Corp and Teucrium Corn

Given the investment horizon of 90 days Microsoft Corp is expected to under-perform the Teucrium Corn. In addition to that, Microsoft Corp is 1.13 times more volatile than Teucrium Corn. It trades about -0.09 of its total potential returns per unit of risk. Teucrium Corn is currently generating about 0.14 per unit of volatility. If you would invest  2,345  in Teucrium Corn on July 5, 2022 and sell it today you would earn a total of  355.00  from holding Teucrium Corn or generate 15.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.46%
ValuesDaily Returns

Microsoft Corp  vs.  Teucrium Corn

 Performance (%) 
       Timeline  
Microsoft Corp 
Microsoft Performance
0 of 100
Over the last 90 days Microsoft Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Microsoft Price Channel

Teucrium Corn 
Teucrium Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Teucrium Corn are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Teucrium Corn disclosed solid returns over the last few months and may actually be approaching a breakup point.

Teucrium Price Channel

Microsoft Corp and Teucrium Corn Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microsoft Corp and Teucrium Corn

The main advantage of trading using opposite Microsoft Corp and Teucrium Corn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Teucrium Corn 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 Teucrium Corn will offset losses from the drop in Teucrium Corn's long position.
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The idea behind Microsoft Corp and Teucrium Corn 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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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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