Correlation Between Microsoft and Fubon SSE180
Can any of the company-specific risk be diversified away by investing in both Microsoft and Fubon SSE180 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 Fubon SSE180 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Fubon SSE180 Leveraged, you can compare the effects of market volatilities on Microsoft and Fubon SSE180 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 Fubon SSE180. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Fubon SSE180.
Diversification Opportunities for Microsoft and Fubon SSE180
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Fubon is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Fubon SSE180 Leveraged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon SSE180 Leveraged 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 Fubon SSE180. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon SSE180 Leveraged has no effect on the direction of Microsoft i.e., Microsoft and Fubon SSE180 go up and down completely randomly.
Pair Corralation between Microsoft and Fubon SSE180
Given the investment horizon of 90 days Microsoft is expected to generate 1.91 times less return on investment than Fubon SSE180. But when comparing it to its historical volatility, Microsoft is 2.38 times less risky than Fubon SSE180. It trades about 0.06 of its potential returns per unit of risk. Fubon SSE180 Leveraged is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,043 in Fubon SSE180 Leveraged on August 29, 2024 and sell it today you would earn a total of 771.00 from holding Fubon SSE180 Leveraged or generate 25.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.58% |
| Values | Daily Returns |
Microsoft vs. Fubon SSE180 Leveraged
Performance |
| Timeline |
| Microsoft |
| Fubon SSE180 Leveraged |
Microsoft and Fubon SSE180 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Fubon SSE180
The main advantage of trading using opposite Microsoft and Fubon SSE180 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Fubon SSE180 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 Fubon SSE180 will offset losses from the drop in Fubon SSE180's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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