Correlation Between Microsoft and ImagineAR
Can any of the company-specific risk be diversified away by investing in both Microsoft and ImagineAR 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 ImagineAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ImagineAR, you can compare the effects of market volatilities on Microsoft and ImagineAR 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 ImagineAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ImagineAR.
Diversification Opportunities for Microsoft and ImagineAR
Excellent diversification
The 3 months correlation between Microsoft and ImagineAR is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ImagineAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImagineAR 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 ImagineAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImagineAR has no effect on the direction of Microsoft i.e., Microsoft and ImagineAR go up and down completely randomly.
Pair Corralation between Microsoft and ImagineAR
Assuming the 90 days trading horizon Microsoft is expected to generate 7.42 times less return on investment than ImagineAR. But when comparing it to its historical volatility, Microsoft is 8.56 times less risky than ImagineAR. It trades about 0.07 of its potential returns per unit of risk. ImagineAR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2.30 in ImagineAR on November 5, 2024 and sell it today you would earn a total of 1.85 from holding ImagineAR or generate 80.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. ImagineAR
Performance |
| Timeline |
| Microsoft |
| ImagineAR |
Microsoft and ImagineAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ImagineAR
The main advantage of trading using opposite Microsoft and ImagineAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ImagineAR 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 ImagineAR will offset losses from the drop in ImagineAR's long position.| Microsoft vs. Summit Hotel Properties | Microsoft vs. Tyson Foods | Microsoft vs. Choice Hotels International | Microsoft vs. Dalata Hotel Group |
| ImagineAR vs. Hua Hong Semiconductor | ImagineAR vs. Magnachip Semiconductor | ImagineAR vs. Wenzhou Kangning Hospital | ImagineAR vs. US Physical Therapy |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |