Correlation Between Microsoft and Microsoft
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Microsoft, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Microsoft.
Diversification Opportunities for Microsoft and Microsoft
No risk reduction
The 3 months correlation between Microsoft and Microsoft is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 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 Microsoft i.e., Microsoft and Microsoft go up and down completely randomly.
Pair Corralation between Microsoft and Microsoft
Assuming the 90 days trading horizon Microsoft is expected to generate 1.03 times less return on investment than Microsoft. In addition to that, Microsoft is 1.04 times more volatile than Microsoft. It trades about 0.08 of its total potential returns per unit of risk. Microsoft is currently generating about 0.08 per unit of volatility. If you would invest 23,292 in Microsoft on August 24, 2024 and sell it today you would earn a total of 16,503 from holding Microsoft or generate 70.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Microsoft
Performance |
| Timeline |
| Microsoft |
| Microsoft |
Microsoft and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Microsoft
The main advantage of trading using opposite Microsoft and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. PENN NATL GAMING | Microsoft vs. DEVRY EDUCATION GRP | Microsoft vs. Perdoceo Education | Microsoft vs. TROPHY GAMES DEV |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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