Correlation Between Microsoft and CTBC Emerging
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By analyzing existing cross correlation between Microsoft and CTBC Emerging Asia, you can compare the effects of market volatilities on Microsoft and CTBC Emerging 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 CTBC Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CTBC Emerging.
Diversification Opportunities for Microsoft and CTBC Emerging
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and CTBC is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CTBC Emerging Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTBC Emerging Asia 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 CTBC Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTBC Emerging Asia has no effect on the direction of Microsoft i.e., Microsoft and CTBC Emerging go up and down completely randomly.
Pair Corralation between Microsoft and CTBC Emerging
Given the investment horizon of 90 days Microsoft is expected to generate 2.92 times more return on investment than CTBC Emerging. However, Microsoft is 2.92 times more volatile than CTBC Emerging Asia. It trades about 0.05 of its potential returns per unit of risk. CTBC Emerging Asia is currently generating about 0.06 per unit of risk. If you would invest 37,191 in Microsoft on September 3, 2024 and sell it today you would earn a total of 5,155 from holding Microsoft or generate 13.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.37% |
| Values | Daily Returns |
Microsoft vs. CTBC Emerging Asia
Performance |
| Timeline |
| Microsoft |
| CTBC Emerging Asia |
Microsoft and CTBC Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and CTBC Emerging
The main advantage of trading using opposite Microsoft and CTBC Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CTBC Emerging 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 CTBC Emerging will offset losses from the drop in CTBC Emerging's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| CTBC Emerging vs. CTBC USD Corporate | CTBC Emerging vs. CTBC 20 Year | CTBC Emerging vs. CTBC TIP Customized | CTBC Emerging vs. CTBC Treasury 20 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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