Correlation Between Microsoft and Amedeo Air
Can any of the company-specific risk be diversified away by investing in both Microsoft and Amedeo Air 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 Amedeo Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Amedeo Air Four, you can compare the effects of market volatilities on Microsoft and Amedeo Air 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 Amedeo Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Amedeo Air.
Diversification Opportunities for Microsoft and Amedeo Air
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Amedeo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Amedeo Air Four in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amedeo Air Four 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 Amedeo Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amedeo Air Four has no effect on the direction of Microsoft i.e., Microsoft and Amedeo Air go up and down completely randomly.
Pair Corralation between Microsoft and Amedeo Air
Given the investment horizon of 90 days Microsoft is expected to generate 1.55 times less return on investment than Amedeo Air. In addition to that, Microsoft is 1.77 times more volatile than Amedeo Air Four. It trades about 0.19 of its total potential returns per unit of risk. Amedeo Air Four is currently generating about 0.51 per unit of volatility. If you would invest 4,950 in Amedeo Air Four on September 1, 2024 and sell it today you would earn a total of 370.00 from holding Amedeo Air Four or generate 7.47% 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. Amedeo Air Four
Performance |
| Timeline |
| Microsoft |
| Amedeo Air Four |
Microsoft and Amedeo Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Amedeo Air
The main advantage of trading using opposite Microsoft and Amedeo Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Amedeo Air 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 Amedeo Air will offset losses from the drop in Amedeo Air's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Amedeo Air vs. Samsung Electronics Co | Amedeo Air vs. Samsung Electronics Co | Amedeo Air vs. Hyundai Motor | Amedeo Air vs. Toyota Motor Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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