Correlation Between Microsoft and HACKETT GROUP
Can any of the company-specific risk be diversified away by investing in both Microsoft and HACKETT GROUP 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 HACKETT GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HACKETT GROUP, you can compare the effects of market volatilities on Microsoft and HACKETT GROUP 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 HACKETT GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HACKETT GROUP.
Diversification Opportunities for Microsoft and HACKETT GROUP
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and HACKETT is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HACKETT GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HACKETT GROUP 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 HACKETT GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HACKETT GROUP has no effect on the direction of Microsoft i.e., Microsoft and HACKETT GROUP go up and down completely randomly.
Pair Corralation between Microsoft and HACKETT GROUP
Assuming the 90 days trading horizon Microsoft is expected to generate 0.57 times more return on investment than HACKETT GROUP. However, Microsoft is 1.75 times less risky than HACKETT GROUP. It trades about 0.31 of its potential returns per unit of risk. HACKETT GROUP is currently generating about 0.12 per unit of risk. If you would invest 39,217 in Microsoft on September 12, 2024 and sell it today you would earn a total of 3,523 from holding Microsoft or generate 8.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. HACKETT GROUP
Performance |
| Timeline |
| Microsoft |
| HACKETT GROUP |
Microsoft and HACKETT GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and HACKETT GROUP
The main advantage of trading using opposite Microsoft and HACKETT GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, HACKETT GROUP 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 HACKETT GROUP will offset losses from the drop in HACKETT GROUP's long position.| Microsoft vs. QURATE RETAIL INC | Microsoft vs. The Trade Desk | Microsoft vs. Consolidated Communications Holdings | Microsoft vs. Internet Thailand PCL |
| HACKETT GROUP vs. CVW CLEANTECH INC | HACKETT GROUP vs. CHINA TELECOM H | HACKETT GROUP vs. Charter Communications | HACKETT GROUP vs. Laureate Education |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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