Correlation Between Microsoft and CAL MAINE
Can any of the company-specific risk be diversified away by investing in both Microsoft and CAL MAINE 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 CAL MAINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CAL MAINE FOODS, you can compare the effects of market volatilities on Microsoft and CAL MAINE 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 CAL MAINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CAL MAINE.
Diversification Opportunities for Microsoft and CAL MAINE
Poor diversification
The 3 months correlation between Microsoft and CAL is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CAL MAINE FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAL MAINE FOODS 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 CAL MAINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAL MAINE FOODS has no effect on the direction of Microsoft i.e., Microsoft and CAL MAINE go up and down completely randomly.
Pair Corralation between Microsoft and CAL MAINE
Assuming the 90 days trading horizon Microsoft is expected to generate 4.08 times less return on investment than CAL MAINE. In addition to that, Microsoft is 1.07 times more volatile than CAL MAINE FOODS. It trades about 0.07 of its total potential returns per unit of risk. CAL MAINE FOODS is currently generating about 0.32 per unit of volatility. If you would invest 8,154 in CAL MAINE FOODS on August 29, 2024 and sell it today you would earn a total of 990.00 from holding CAL MAINE FOODS or generate 12.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. CAL MAINE FOODS
Performance |
| Timeline |
| Microsoft |
| CAL MAINE FOODS |
Microsoft and CAL MAINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and CAL MAINE
The main advantage of trading using opposite Microsoft and CAL MAINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CAL MAINE 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 CAL MAINE will offset losses from the drop in CAL MAINE's long position.| Microsoft vs. Pentair plc | Microsoft vs. NORWEGIAN AIR SHUT | Microsoft vs. GEAR4MUSIC LS 10 | Microsoft vs. Fair Isaac Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |