Correlation Between FORWARD AIR and Microsoft
Can any of the company-specific risk be diversified away by investing in both FORWARD AIR 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 FORWARD AIR and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FORWARD AIR P and Microsoft, you can compare the effects of market volatilities on FORWARD AIR 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 FORWARD AIR with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORWARD AIR and Microsoft.
Diversification Opportunities for FORWARD AIR and Microsoft
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between FORWARD and Microsoft is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and FORWARD AIR 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 FORWARD AIR P 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 FORWARD AIR i.e., FORWARD AIR and Microsoft go up and down completely randomly.
Pair Corralation between FORWARD AIR and Microsoft
Assuming the 90 days horizon FORWARD AIR P is expected to under-perform the Microsoft. In addition to that, FORWARD AIR is 2.18 times more volatile than Microsoft. It trades about -0.07 of its total potential returns per unit of risk. Microsoft is currently generating about 0.28 per unit of volatility. If you would invest 40,469 in Microsoft on September 14, 2024 and sell it today you would earn a total of 2,786 from holding Microsoft or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FORWARD AIR P vs. Microsoft
Performance |
| Timeline |
| FORWARD AIR P |
| Microsoft |
FORWARD AIR and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FORWARD AIR and Microsoft
The main advantage of trading using opposite FORWARD AIR and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORWARD AIR 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.| FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc |
| Microsoft vs. AEGEAN AIRLINES | Microsoft vs. United Airlines Holdings | Microsoft vs. American Airlines Group | Microsoft vs. ECHO INVESTMENT ZY |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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