Correlation Between Microsoft and Akoustis Technologies
Can any of the company-specific risk be diversified away by investing in both Microsoft and Akoustis Technologies 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 Akoustis Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Akoustis Technologies, you can compare the effects of market volatilities on Microsoft and Akoustis Technologies 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 Akoustis Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Akoustis Technologies.
Diversification Opportunities for Microsoft and Akoustis Technologies
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Akoustis is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Akoustis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akoustis Technologies 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 Akoustis Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akoustis Technologies has no effect on the direction of Microsoft i.e., Microsoft and Akoustis Technologies go up and down completely randomly.
Pair Corralation between Microsoft and Akoustis Technologies
Given the investment horizon of 90 days Microsoft is expected to generate 0.15 times more return on investment than Akoustis Technologies. However, Microsoft is 6.5 times less risky than Akoustis Technologies. It trades about 0.02 of its potential returns per unit of risk. Akoustis Technologies is currently generating about -0.02 per unit of risk. If you would invest 41,195 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,151 from holding Microsoft or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Akoustis Technologies
Performance |
| Timeline |
| Microsoft |
| Akoustis Technologies |
Microsoft and Akoustis Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Akoustis Technologies
The main advantage of trading using opposite Microsoft and Akoustis Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Akoustis Technologies 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 Akoustis Technologies will offset losses from the drop in Akoustis Technologies' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Akoustis Technologies vs. Aviat Networks | Akoustis Technologies vs. AudioCodes | Akoustis Technologies vs. Silicom | Akoustis Technologies vs. Gilat Satellite Networks |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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