Correlation Between Microsoft and Americafirst Monthly
Can any of the company-specific risk be diversified away by investing in both Microsoft and Americafirst Monthly 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 Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Americafirst Monthly Risk On, you can compare the effects of market volatilities on Microsoft and Americafirst Monthly 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 Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Americafirst Monthly.
Diversification Opportunities for Microsoft and Americafirst Monthly
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Americafirst is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Americafirst Monthly Risk On in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Monthly 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 Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Monthly has no effect on the direction of Microsoft i.e., Microsoft and Americafirst Monthly go up and down completely randomly.
Pair Corralation between Microsoft and Americafirst Monthly
Given the investment horizon of 90 days Microsoft is expected to generate 1.15 times more return on investment than Americafirst Monthly. However, Microsoft is 1.15 times more volatile than Americafirst Monthly Risk On. It trades about 0.08 of its potential returns per unit of risk. Americafirst Monthly Risk On is currently generating about 0.05 per unit of risk. If you would invest 25,453 in Microsoft on November 8, 2024 and sell it today you would earn a total of 15,876 from holding Microsoft or generate 62.37% 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 Monthly Risk On
Performance |
| Timeline |
| Microsoft |
| Americafirst Monthly |
Microsoft and Americafirst Monthly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Americafirst Monthly
The main advantage of trading using opposite Microsoft and Americafirst Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Americafirst Monthly 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 Monthly will offset losses from the drop in Americafirst Monthly's long position.| Microsoft vs. Crowdstrike Holdings | Microsoft vs. Okta Inc | Microsoft vs. Cloudflare | Microsoft vs. MongoDB |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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