Correlation Between Microsoft and Agilon Health
Can any of the company-specific risk be diversified away by investing in both Microsoft and Agilon Health 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 Agilon Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and agilon health, you can compare the effects of market volatilities on Microsoft and Agilon Health 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 Agilon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Agilon Health.
Diversification Opportunities for Microsoft and Agilon Health
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Agilon is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and agilon health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on agilon health 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 Agilon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of agilon health has no effect on the direction of Microsoft i.e., Microsoft and Agilon Health go up and down completely randomly.
Pair Corralation between Microsoft and Agilon Health
Given the investment horizon of 90 days Microsoft is expected to under-perform the Agilon Health. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 6.22 times less risky than Agilon Health. The stock trades about -0.04 of its potential returns per unit of risk. The agilon health is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 246.00 in agilon health on August 31, 2024 and sell it today you would lose (35.00) from holding agilon health or give up 14.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. agilon health
Performance |
| Timeline |
| Microsoft |
| agilon health |
Microsoft and Agilon Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Agilon Health
The main advantage of trading using opposite Microsoft and Agilon Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Agilon Health 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 Agilon Health will offset losses from the drop in Agilon Health's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Agilon Health vs. The Ensign Group | Agilon Health vs. Universal Health Services | Agilon Health vs. Addus HomeCare | Agilon Health vs. Encompass Health 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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