Correlation Between Microsoft and Magni Tech
Can any of the company-specific risk be diversified away by investing in both Microsoft and Magni Tech 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 Magni Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Magni Tech Industries, you can compare the effects of market volatilities on Microsoft and Magni Tech 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 Magni Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Magni Tech.
Diversification Opportunities for Microsoft and Magni Tech
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Magni is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Magni Tech Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magni Tech Industries 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 Magni Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magni Tech Industries has no effect on the direction of Microsoft i.e., Microsoft and Magni Tech go up and down completely randomly.
Pair Corralation between Microsoft and Magni Tech
Given the investment horizon of 90 days Microsoft is expected to under-perform the Magni Tech. In addition to that, Microsoft is 1.76 times more volatile than Magni Tech Industries. It trades about -0.04 of its total potential returns per unit of risk. Magni Tech Industries is currently generating about 0.51 per unit of volatility. If you would invest 243.00 in Magni Tech Industries on August 31, 2024 and sell it today you would earn a total of 27.00 from holding Magni Tech Industries or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Magni Tech Industries
Performance |
| Timeline |
| Microsoft |
| Magni Tech Industries |
Microsoft and Magni Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Magni Tech
The main advantage of trading using opposite Microsoft and Magni Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Magni Tech 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 Magni Tech will offset losses from the drop in Magni Tech's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Magni Tech vs. ES Ceramics Technology | Magni Tech vs. TAS Offshore Bhd | Magni Tech vs. Icon Offshore Bhd | Magni Tech vs. Uchi Technologies Bhd |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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