Correlation Between Microsoft and Advanced Blockchain
Can any of the company-specific risk be diversified away by investing in both Microsoft and Advanced Blockchain 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 Advanced Blockchain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Advanced Blockchain AG, you can compare the effects of market volatilities on Microsoft and Advanced Blockchain 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 Advanced Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Advanced Blockchain.
Diversification Opportunities for Microsoft and Advanced Blockchain
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and Advanced is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Advanced Blockchain AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Blockchain 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 Advanced Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Blockchain has no effect on the direction of Microsoft i.e., Microsoft and Advanced Blockchain go up and down completely randomly.
Pair Corralation between Microsoft and Advanced Blockchain
Assuming the 90 days trading horizon Microsoft is expected to generate 1.86 times less return on investment than Advanced Blockchain. But when comparing it to its historical volatility, Microsoft is 4.73 times less risky than Advanced Blockchain. It trades about 0.2 of its potential returns per unit of risk. Advanced Blockchain AG is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 469.00 in Advanced Blockchain AG on September 1, 2024 and sell it today you would earn a total of 35.00 from holding Advanced Blockchain AG or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Advanced Blockchain AG
Performance |
| Timeline |
| Microsoft |
| Advanced Blockchain |
Microsoft and Advanced Blockchain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Advanced Blockchain
The main advantage of trading using opposite Microsoft and Advanced Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Advanced Blockchain 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 Advanced Blockchain will offset losses from the drop in Advanced Blockchain's long position.| Microsoft vs. Pentair plc | Microsoft vs. Norwegian Air Shuttle | Microsoft vs. GEELY AUTOMOBILE | Microsoft vs. DELTA AIR LINES |
| Advanced Blockchain vs. HomeToGo SE | Advanced Blockchain vs. LGI Homes | Advanced Blockchain vs. Tri Pointe Homes | Advanced Blockchain vs. Taylor Morrison Home |
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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