Correlation Between Microsoft and MONEYSUPERMARKET
Can any of the company-specific risk be diversified away by investing in both Microsoft and MONEYSUPERMARKET 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 MONEYSUPERMARKET into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and MONEYSUPERMARKET, you can compare the effects of market volatilities on Microsoft and MONEYSUPERMARKET 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 MONEYSUPERMARKET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and MONEYSUPERMARKET.
Diversification Opportunities for Microsoft and MONEYSUPERMARKET
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and MONEYSUPERMARKET is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and MONEYSUPERMARKET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONEYSUPERMARKET 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 MONEYSUPERMARKET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONEYSUPERMARKET has no effect on the direction of Microsoft i.e., Microsoft and MONEYSUPERMARKET go up and down completely randomly.
Pair Corralation between Microsoft and MONEYSUPERMARKET
Assuming the 90 days trading horizon Microsoft is expected to generate 1.11 times more return on investment than MONEYSUPERMARKET. However, Microsoft is 1.11 times more volatile than MONEYSUPERMARKET. It trades about 0.09 of its potential returns per unit of risk. MONEYSUPERMARKET is currently generating about 0.01 per unit of risk. If you would invest 39,432 in Microsoft on August 29, 2024 and sell it today you would earn a total of 1,268 from holding Microsoft or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. MONEYSUPERMARKET
Performance |
| Timeline |
| Microsoft |
| MONEYSUPERMARKET |
Microsoft and MONEYSUPERMARKET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and MONEYSUPERMARKET
The main advantage of trading using opposite Microsoft and MONEYSUPERMARKET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, MONEYSUPERMARKET 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 MONEYSUPERMARKET will offset losses from the drop in MONEYSUPERMARKET's long position.| Microsoft vs. Iridium Communications | Microsoft vs. Consolidated Communications Holdings | Microsoft vs. Charter Communications | Microsoft vs. SAFETY MEDICAL PROD |
| MONEYSUPERMARKET vs. Apple Inc | MONEYSUPERMARKET vs. Apple Inc | MONEYSUPERMARKET vs. Superior Plus Corp | MONEYSUPERMARKET vs. SIVERS SEMICONDUCTORS AB |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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