Correlation Between Microsoft and AM EAGLE
Can any of the company-specific risk be diversified away by investing in both Microsoft and AM EAGLE 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 AM EAGLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on Microsoft and AM EAGLE 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 AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AM EAGLE.
Diversification Opportunities for Microsoft and AM EAGLE
Excellent diversification
The 3 months correlation between Microsoft and AFG is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS 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 AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of Microsoft i.e., Microsoft and AM EAGLE go up and down completely randomly.
Pair Corralation between Microsoft and AM EAGLE
Assuming the 90 days trading horizon Microsoft is expected to generate 0.33 times more return on investment than AM EAGLE. However, Microsoft is 3.04 times less risky than AM EAGLE. It trades about 0.22 of its potential returns per unit of risk. AM EAGLE OUTFITTERS is currently generating about -0.14 per unit of risk. If you would invest 39,685 in Microsoft on September 24, 2024 and sell it today you would earn a total of 2,225 from holding Microsoft or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. AM EAGLE OUTFITTERS
Performance |
| Timeline |
| Microsoft |
| AM EAGLE OUTFITTERS |
Microsoft and AM EAGLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AM EAGLE
The main advantage of trading using opposite Microsoft and AM EAGLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AM EAGLE 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 AM EAGLE will offset losses from the drop in AM EAGLE's long position.| Microsoft vs. WILLIS LEASE FIN | Microsoft vs. SYSTEMAIR AB | Microsoft vs. Wizz Air Holdings | Microsoft vs. SEALED AIR |
| AM EAGLE vs. ARDAGH METAL PACDL 0001 | AM EAGLE vs. Ping An Insurance | AM EAGLE vs. Jacquet Metal Service | AM EAGLE vs. LIFENET INSURANCE CO |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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