Correlation Between Microsoft and Americafirst Tactical
Can any of the company-specific risk be diversified away by investing in both Microsoft and Americafirst Tactical 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 Americafirst Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Americafirst Tactical Alpha, you can compare the effects of market volatilities on Microsoft and Americafirst Tactical 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 Americafirst Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Americafirst Tactical.
Diversification Opportunities for Microsoft and Americafirst Tactical
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Americafirst is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Americafirst Tactical Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Tactical 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 Americafirst Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Tactical has no effect on the direction of Microsoft i.e., Microsoft and Americafirst Tactical go up and down completely randomly.
Pair Corralation between Microsoft and Americafirst Tactical
Given the investment horizon of 90 days Microsoft is expected to under-perform the Americafirst Tactical. In addition to that, Microsoft is 1.16 times more volatile than Americafirst Tactical Alpha. It trades about -0.04 of its total potential returns per unit of risk. Americafirst Tactical Alpha is currently generating about 0.19 per unit of volatility. If you would invest 1,500 in Americafirst Tactical Alpha on August 30, 2024 and sell it today you would earn a total of 94.00 from holding Americafirst Tactical Alpha or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Americafirst Tactical Alpha
Performance |
| Timeline |
| Microsoft |
| Americafirst Tactical |
Microsoft and Americafirst Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Americafirst Tactical
The main advantage of trading using opposite Microsoft and Americafirst Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Americafirst Tactical 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 Americafirst Tactical will offset losses from the drop in Americafirst Tactical's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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