Correlation Between Microsoft and Ace Global
Can any of the company-specific risk be diversified away by investing in both Microsoft and Ace Global 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 Ace Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Ace Global Business, you can compare the effects of market volatilities on Microsoft and Ace Global 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 Ace Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Ace Global.
Diversification Opportunities for Microsoft and Ace Global
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Ace is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Ace Global Business in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ace Global Business 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 Ace Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ace Global Business has no effect on the direction of Microsoft i.e., Microsoft and Ace Global go up and down completely randomly.
Pair Corralation between Microsoft and Ace Global
If you would invest 1,134 in Ace Global Business on October 24, 2024 and sell it today you would earn a total of 0.00 from holding Ace Global Business or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 5.56% |
| Values | Daily Returns |
Microsoft vs. Ace Global Business
Performance |
| Timeline |
| Microsoft |
| Ace Global Business |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Ace Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Ace Global
The main advantage of trading using opposite Microsoft and Ace Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Ace Global 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 Ace Global will offset losses from the drop in Ace Global's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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