Correlation Between Microsoft and AUST AGRICULTURAL
Can any of the company-specific risk be diversified away by investing in both Microsoft and AUST AGRICULTURAL 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 AUST AGRICULTURAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AUST AGRICULTURAL, you can compare the effects of market volatilities on Microsoft and AUST AGRICULTURAL 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 AUST AGRICULTURAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AUST AGRICULTURAL.
Diversification Opportunities for Microsoft and AUST AGRICULTURAL
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and AUST is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AUST AGRICULTURAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUST AGRICULTURAL 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 AUST AGRICULTURAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUST AGRICULTURAL has no effect on the direction of Microsoft i.e., Microsoft and AUST AGRICULTURAL go up and down completely randomly.
Pair Corralation between Microsoft and AUST AGRICULTURAL
Assuming the 90 days trading horizon Microsoft is expected to generate 1.1 times more return on investment than AUST AGRICULTURAL. However, Microsoft is 1.1 times more volatile than AUST AGRICULTURAL. It trades about 0.44 of its potential returns per unit of risk. AUST AGRICULTURAL is currently generating about -0.05 per unit of risk. If you would invest 39,157 in Microsoft on September 19, 2024 and sell it today you would earn a total of 4,123 from holding Microsoft or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. AUST AGRICULTURAL
Performance |
| Timeline |
| Microsoft |
| AUST AGRICULTURAL |
Microsoft and AUST AGRICULTURAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AUST AGRICULTURAL
The main advantage of trading using opposite Microsoft and AUST AGRICULTURAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AUST AGRICULTURAL 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 AUST AGRICULTURAL will offset losses from the drop in AUST AGRICULTURAL's long position.| Microsoft vs. NAKED WINES PLC | Microsoft vs. AGRICULTBK HADR25 YC | Microsoft vs. CVS Health | Microsoft vs. Ramsay Health Care |
| AUST AGRICULTURAL vs. PROSIEBENSAT1 MEDIADR4 | AUST AGRICULTURAL vs. Playtech plc | AUST AGRICULTURAL vs. LG Display Co | AUST AGRICULTURAL vs. Tencent Music Entertainment |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |