Correlation Between Microsoft and Wing Yip
Can any of the company-specific risk be diversified away by investing in both Microsoft and Wing Yip 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 Wing Yip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Wing Yip Food, you can compare the effects of market volatilities on Microsoft and Wing Yip 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 Wing Yip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Wing Yip.
Diversification Opportunities for Microsoft and Wing Yip
Very good diversification
The 3 months correlation between Microsoft and Wing is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Wing Yip Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wing Yip Food 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 Wing Yip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wing Yip Food has no effect on the direction of Microsoft i.e., Microsoft and Wing Yip go up and down completely randomly.
Pair Corralation between Microsoft and Wing Yip
Given the investment horizon of 90 days Microsoft is expected to generate 52.9 times less return on investment than Wing Yip. But when comparing it to its historical volatility, Microsoft is 5.83 times less risky than Wing Yip. It trades about 0.01 of its potential returns per unit of risk. Wing Yip Food is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 88,300 in Wing Yip Food on August 27, 2024 and sell it today you would earn a total of 149,700 from holding Wing Yip Food or generate 169.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.74% |
| Values | Daily Returns |
Microsoft vs. Wing Yip Food
Performance |
| Timeline |
| Microsoft |
| Wing Yip Food |
Microsoft and Wing Yip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Wing Yip
The main advantage of trading using opposite Microsoft and Wing Yip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Wing Yip 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 Wing Yip will offset losses from the drop in Wing Yip's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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