Correlation Between Microsoft and IShares Core
Can any of the company-specific risk be diversified away by investing in both Microsoft and IShares Core 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 IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and iShares Core Aggregate, you can compare the effects of market volatilities on Microsoft and IShares Core 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and IShares Core.
Diversification Opportunities for Microsoft and IShares Core
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and IShares is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and iShares Core Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Aggregate 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Aggregate has no effect on the direction of Microsoft i.e., Microsoft and IShares Core go up and down completely randomly.
Pair Corralation between Microsoft and IShares Core
Given the investment horizon of 90 days Microsoft is expected to under-perform the IShares Core. In addition to that, Microsoft is 5.32 times more volatile than iShares Core Aggregate. It trades about -0.06 of its total potential returns per unit of risk. iShares Core Aggregate is currently generating about -0.07 per unit of volatility. If you would invest 9,828 in iShares Core Aggregate on August 26, 2024 and sell it today you would lose (47.00) from holding iShares Core Aggregate or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. iShares Core Aggregate
Performance |
| Timeline |
| Microsoft |
| iShares Core Aggregate |
Microsoft and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and IShares Core
The main advantage of trading using opposite Microsoft and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
| IShares Core vs. iShares MSCI EAFE | IShares Core vs. iShares iBoxx Investment | IShares Core vs. iShares TIPS Bond | IShares Core vs. iShares 1 3 Year |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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