Correlation Between Microsoft and Thermaltake Technology
Can any of the company-specific risk be diversified away by investing in both Microsoft and Thermaltake Technology 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 Thermaltake Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Thermaltake Technology Co, you can compare the effects of market volatilities on Microsoft and Thermaltake Technology 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 Thermaltake Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Thermaltake Technology.
Diversification Opportunities for Microsoft and Thermaltake Technology
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Thermaltake is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Thermaltake Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermaltake Technology 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 Thermaltake Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermaltake Technology has no effect on the direction of Microsoft i.e., Microsoft and Thermaltake Technology go up and down completely randomly.
Pair Corralation between Microsoft and Thermaltake Technology
Given the investment horizon of 90 days Microsoft is expected to under-perform the Thermaltake Technology. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.22 times less risky than Thermaltake Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Thermaltake Technology Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,710 in Thermaltake Technology Co on August 31, 2024 and sell it today you would lose (50.00) from holding Thermaltake Technology Co or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Thermaltake Technology Co
Performance |
| Timeline |
| Microsoft |
| Thermaltake Technology |
Microsoft and Thermaltake Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Thermaltake Technology
The main advantage of trading using opposite Microsoft and Thermaltake Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Thermaltake Technology 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 Thermaltake Technology will offset losses from the drop in Thermaltake Technology's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Thermaltake Technology vs. ASRock Inc | Thermaltake Technology vs. Auras Technology Co | Thermaltake Technology vs. Micro Star International Co | Thermaltake Technology vs. Gigabyte Technology Co |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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