Correlation Between SPROUTS FARMERS and Microsoft
Can any of the company-specific risk be diversified away by investing in both SPROUTS FARMERS 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 SPROUTS FARMERS and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPROUTS FARMERS MKT and Microsoft, you can compare the effects of market volatilities on SPROUTS FARMERS 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 SPROUTS FARMERS with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPROUTS FARMERS and Microsoft.
Diversification Opportunities for SPROUTS FARMERS and Microsoft
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPROUTS and Microsoft is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SPROUTS FARMERS MKT and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and SPROUTS FARMERS 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 SPROUTS FARMERS MKT 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 SPROUTS FARMERS i.e., SPROUTS FARMERS and Microsoft go up and down completely randomly.
Pair Corralation between SPROUTS FARMERS and Microsoft
Assuming the 90 days trading horizon SPROUTS FARMERS MKT is expected to generate 2.33 times more return on investment than Microsoft. However, SPROUTS FARMERS is 2.33 times more volatile than Microsoft. It trades about -0.02 of its potential returns per unit of risk. Microsoft is currently generating about -0.41 per unit of risk. If you would invest 13,650 in SPROUTS FARMERS MKT on October 17, 2024 and sell it today you would lose (150.00) from holding SPROUTS FARMERS MKT or give up 1.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 94.44% |
Values | Daily Returns |
SPROUTS FARMERS MKT vs. Microsoft
Performance |
Timeline |
SPROUTS FARMERS MKT |
Microsoft |
SPROUTS FARMERS and Microsoft Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPROUTS FARMERS and Microsoft
The main advantage of trading using opposite SPROUTS FARMERS and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPROUTS FARMERS 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.SPROUTS FARMERS vs. HYATT HOTELS A | SPROUTS FARMERS vs. GEAR4MUSIC LS 10 | SPROUTS FARMERS vs. GRUPO CARSO A1 | SPROUTS FARMERS vs. Geely Automobile Holdings |
Microsoft vs. SANOK RUBBER ZY | Microsoft vs. TRADEGATE | Microsoft vs. NEWELL RUBBERMAID | Microsoft vs. Canon Marketing Japan |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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