Correlation Between Microsoft and Rogers Communications
Can any of the company-specific risk be diversified away by investing in both Microsoft and Rogers Communications 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 Rogers Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Rogers Communications, you can compare the effects of market volatilities on Microsoft and Rogers Communications 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 Rogers Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Rogers Communications.
Diversification Opportunities for Microsoft and Rogers Communications
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Rogers is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications 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 Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of Microsoft i.e., Microsoft and Rogers Communications go up and down completely randomly.
Pair Corralation between Microsoft and Rogers Communications
Assuming the 90 days trading horizon Microsoft is expected to generate 1.17 times more return on investment than Rogers Communications. However, Microsoft is 1.17 times more volatile than Rogers Communications. It trades about 0.1 of its potential returns per unit of risk. Rogers Communications is currently generating about -0.08 per unit of risk. If you would invest 37,196 in Microsoft on August 29, 2024 and sell it today you would earn a total of 3,404 from holding Microsoft or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Microsoft vs. Rogers Communications
Performance |
| Timeline |
| Microsoft |
| Rogers Communications |
Microsoft and Rogers Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Rogers Communications
The main advantage of trading using opposite Microsoft and Rogers Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Rogers Communications 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 Rogers Communications will offset losses from the drop in Rogers Communications' long position.| Microsoft vs. Eagle Materials | Microsoft vs. Vulcan Materials | Microsoft vs. Plastic Omnium | Microsoft vs. Shenandoah Telecommunications |
| Rogers Communications vs. Apple Inc | Rogers Communications vs. Apple Inc | Rogers Communications vs. Apple Inc | Rogers Communications 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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