Correlation Between Microsoft and Aerius International
Can any of the company-specific risk be diversified away by investing in both Microsoft and Aerius International 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 Aerius International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Aerius International, you can compare the effects of market volatilities on Microsoft and Aerius International 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 Aerius International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Aerius International.
Diversification Opportunities for Microsoft and Aerius International
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Aerius is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Aerius International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerius International 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 Aerius International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerius International has no effect on the direction of Microsoft i.e., Microsoft and Aerius International go up and down completely randomly.
Pair Corralation between Microsoft and Aerius International
Given the investment horizon of 90 days Microsoft is expected to generate 1.34 times less return on investment than Aerius International. But when comparing it to its historical volatility, Microsoft is 1.16 times less risky than Aerius International. It trades about 0.19 of its potential returns per unit of risk. Aerius International is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.16 in Aerius International on September 1, 2024 and sell it today you would earn a total of 0.01 from holding Aerius International or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Aerius International
Performance |
| Timeline |
| Microsoft |
| Aerius International |
Microsoft and Aerius International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Aerius International
The main advantage of trading using opposite Microsoft and Aerius International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Aerius International 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 Aerius International will offset losses from the drop in Aerius International's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Aerius International vs. Daniels Corporate Advisory | Aerius International vs. AimRite Holdings Corp | Aerius International vs. Sack Lunch Productions | Aerius International vs. Dalrada Financial 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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