Correlation Between Microsoft and ASURE SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Microsoft and ASURE SOFTWARE 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 ASURE SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ASURE SOFTWARE, you can compare the effects of market volatilities on Microsoft and ASURE SOFTWARE 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 ASURE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ASURE SOFTWARE.
Diversification Opportunities for Microsoft and ASURE SOFTWARE
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and ASURE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ASURE SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASURE SOFTWARE 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 ASURE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASURE SOFTWARE has no effect on the direction of Microsoft i.e., Microsoft and ASURE SOFTWARE go up and down completely randomly.
Pair Corralation between Microsoft and ASURE SOFTWARE
Assuming the 90 days trading horizon Microsoft is expected to generate 1.27 times less return on investment than ASURE SOFTWARE. But when comparing it to its historical volatility, Microsoft is 2.13 times less risky than ASURE SOFTWARE. It trades about 0.07 of its potential returns per unit of risk. ASURE SOFTWARE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 900.00 in ASURE SOFTWARE on August 29, 2024 and sell it today you would earn a total of 20.00 from holding ASURE SOFTWARE or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. ASURE SOFTWARE
Performance |
| Timeline |
| Microsoft |
| ASURE SOFTWARE |
Microsoft and ASURE SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ASURE SOFTWARE
The main advantage of trading using opposite Microsoft and ASURE SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ASURE SOFTWARE 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 ASURE SOFTWARE will offset losses from the drop in ASURE SOFTWARE's long position.| Microsoft vs. EPSILON HEALTHCARE LTD | Microsoft vs. HEALTHCARE REAL A | Microsoft vs. STORE ELECTRONIC | Microsoft vs. LPKF Laser Electronics |
| ASURE SOFTWARE vs. Apple Inc | ASURE SOFTWARE vs. Apple Inc | ASURE SOFTWARE vs. Superior Plus Corp | ASURE SOFTWARE 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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