Correlation Between Microsoft and Actron Technology
Can any of the company-specific risk be diversified away by investing in both Microsoft and Actron 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 Actron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Actron Technology, you can compare the effects of market volatilities on Microsoft and Actron 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 Actron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Actron Technology.
Diversification Opportunities for Microsoft and Actron Technology
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Actron is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Actron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Actron 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 Actron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Actron Technology has no effect on the direction of Microsoft i.e., Microsoft and Actron Technology go up and down completely randomly.
Pair Corralation between Microsoft and Actron Technology
Given the investment horizon of 90 days Microsoft is expected to generate 0.59 times more return on investment than Actron Technology. However, Microsoft is 1.7 times less risky than Actron Technology. It trades about 0.05 of its potential returns per unit of risk. Actron Technology is currently generating about 0.0 per unit of risk. If you would invest 36,820 in Microsoft on September 2, 2024 and sell it today you would earn a total of 5,526 from holding Microsoft or generate 15.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.98% |
| Values | Daily Returns |
Microsoft vs. Actron Technology
Performance |
| Timeline |
| Microsoft |
| Actron Technology |
Microsoft and Actron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Actron Technology
The main advantage of trading using opposite Microsoft and Actron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Actron 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 Actron Technology will offset losses from the drop in Actron Technology's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Actron Technology vs. Hota Industrial Mfg | Actron Technology vs. BizLink Holding | Actron Technology vs. Cub Elecparts | Actron Technology vs. Hu Lane Associate |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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