Correlation Between Dow Jones and MICROSOFT
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By analyzing existing cross correlation between Dow Jones Industrial and MICROSOFT PORATION, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of MICROSOFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and MICROSOFT.
Diversification Opportunities for Dow Jones and MICROSOFT
Good diversification
The 3 months correlation between Dow and MICROSOFT is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and MICROSOFT PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MICROSOFT PORATION and Dow Jones 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 Dow Jones Industrial 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 PORATION has no effect on the direction of Dow Jones i.e., Dow Jones and MICROSOFT go up and down completely randomly.
Pair Corralation between Dow Jones and MICROSOFT
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.38 times less return on investment than MICROSOFT. But when comparing it to its historical volatility, Dow Jones Industrial is 2.04 times less risky than MICROSOFT. It trades about 0.34 of its potential returns per unit of risk. MICROSOFT PORATION is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 6,662 in MICROSOFT PORATION on September 5, 2024 and sell it today you would earn a total of 599.00 from holding MICROSOFT PORATION or generate 8.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. MICROSOFT PORATION
Performance |
| Timeline |
Dow Jones and MICROSOFT Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
MICROSOFT PORATION
Pair trading matchups for MICROSOFT
Pair Trading with Dow Jones and MICROSOFT
The main advantage of trading using opposite Dow Jones and MICROSOFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
| MICROSOFT vs. Neogen | MICROSOFT vs. Abcellera Biologics | MICROSOFT vs. Alvotech | MICROSOFT vs. Sellas Life Sciences |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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