Correlation Between Microsoft and PATRIOT BATTERY
Can any of the company-specific risk be diversified away by investing in both Microsoft and PATRIOT BATTERY 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 PATRIOT BATTERY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and PATRIOT BATTERY METINC, you can compare the effects of market volatilities on Microsoft and PATRIOT BATTERY 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 PATRIOT BATTERY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and PATRIOT BATTERY.
Diversification Opportunities for Microsoft and PATRIOT BATTERY
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and PATRIOT is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and PATRIOT BATTERY METINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PATRIOT BATTERY METINC 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 PATRIOT BATTERY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PATRIOT BATTERY METINC has no effect on the direction of Microsoft i.e., Microsoft and PATRIOT BATTERY go up and down completely randomly.
Pair Corralation between Microsoft and PATRIOT BATTERY
Assuming the 90 days trading horizon Microsoft is expected to generate 0.21 times more return on investment than PATRIOT BATTERY. However, Microsoft is 4.71 times less risky than PATRIOT BATTERY. It trades about 0.03 of its potential returns per unit of risk. PATRIOT BATTERY METINC is currently generating about -0.09 per unit of risk. If you would invest 38,258 in Microsoft on August 31, 2024 and sell it today you would earn a total of 1,807 from holding Microsoft or generate 4.72% 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. PATRIOT BATTERY METINC
Performance |
| Timeline |
| Microsoft |
| PATRIOT BATTERY METINC |
Microsoft and PATRIOT BATTERY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and PATRIOT BATTERY
The main advantage of trading using opposite Microsoft and PATRIOT BATTERY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, PATRIOT BATTERY 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 PATRIOT BATTERY will offset losses from the drop in PATRIOT BATTERY's long position.| Microsoft vs. CN MODERN DAIRY | Microsoft vs. Cardinal Health | Microsoft vs. Cal Maine Foods | Microsoft vs. Astral Foods Limited |
| PATRIOT BATTERY vs. Apple Inc | PATRIOT BATTERY vs. Apple Inc | PATRIOT BATTERY vs. Apple Inc | PATRIOT BATTERY vs. Apple Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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