Correlation Between Microsoft and Good Finance
Can any of the company-specific risk be diversified away by investing in both Microsoft and Good Finance 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 Good Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Good Finance Securities, you can compare the effects of market volatilities on Microsoft and Good Finance 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 Good Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Good Finance.
Diversification Opportunities for Microsoft and Good Finance
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Good is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Good Finance Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Finance Securities 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 Good Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Finance Securities has no effect on the direction of Microsoft i.e., Microsoft and Good Finance go up and down completely randomly.
Pair Corralation between Microsoft and Good Finance
Given the investment horizon of 90 days Microsoft is expected to generate 2.73 times less return on investment than Good Finance. But when comparing it to its historical volatility, Microsoft is 1.96 times less risky than Good Finance. It trades about 0.07 of its potential returns per unit of risk. Good Finance Securities is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,480 in Good Finance Securities on September 14, 2024 and sell it today you would earn a total of 920.00 from holding Good Finance Securities or generate 62.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.59% |
| Values | Daily Returns |
Microsoft vs. Good Finance Securities
Performance |
| Timeline |
| Microsoft |
| Good Finance Securities |
Microsoft and Good Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Good Finance
The main advantage of trading using opposite Microsoft and Good Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Good Finance 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 Good Finance will offset losses from the drop in Good Finance's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Good Finance vs. IBF Financial Holdings | Good Finance vs. Capital Securities Corp | Good Finance vs. President Securities Corp | Good Finance vs. China Bills Finance |
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 CEOs Directory module to screen CEOs from public companies around the world.
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