Correlation Between Microsoft and Above Food
Can any of the company-specific risk be diversified away by investing in both Microsoft and Above Food 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 Above Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Above Food Ingredients, you can compare the effects of market volatilities on Microsoft and Above Food 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 Above Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Above Food.
Diversification Opportunities for Microsoft and Above Food
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Above is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Above Food Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Above Food Ingredients 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 Above Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Above Food Ingredients has no effect on the direction of Microsoft i.e., Microsoft and Above Food go up and down completely randomly.
Pair Corralation between Microsoft and Above Food
Given the investment horizon of 90 days Microsoft is expected to generate 0.18 times more return on investment than Above Food. However, Microsoft is 5.67 times less risky than Above Food. It trades about -0.21 of its potential returns per unit of risk. Above Food Ingredients is currently generating about -0.07 per unit of risk. If you would invest 41,416 in Microsoft on December 1, 2024 and sell it today you would lose (1,717) from holding Microsoft or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Above Food Ingredients
Performance |
| Timeline |
| Microsoft |
| Above Food Ingredients |
Microsoft and Above Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Above Food
The main advantage of trading using opposite Microsoft and Above Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Above Food 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 Above Food will offset losses from the drop in Above Food's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Above Food vs. Paranovus Entertainment Technology | Above Food vs. Cardinal Health | Above Food vs. Astral Foods Limited | Above Food vs. Ambev SA ADR |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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