Correlation Between Microsoft and AllDay Marts
Can any of the company-specific risk be diversified away by investing in both Microsoft and AllDay Marts 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 AllDay Marts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AllDay Marts, you can compare the effects of market volatilities on Microsoft and AllDay Marts 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 AllDay Marts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AllDay Marts.
Diversification Opportunities for Microsoft and AllDay Marts
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and AllDay is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AllDay Marts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllDay Marts 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 AllDay Marts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllDay Marts has no effect on the direction of Microsoft i.e., Microsoft and AllDay Marts go up and down completely randomly.
Pair Corralation between Microsoft and AllDay Marts
Given the investment horizon of 90 days Microsoft is expected to generate 0.48 times more return on investment than AllDay Marts. However, Microsoft is 2.07 times less risky than AllDay Marts. It trades about 0.15 of its potential returns per unit of risk. AllDay Marts is currently generating about 0.01 per unit of risk. If you would invest 40,955 in Microsoft on September 2, 2024 and sell it today you would earn a total of 1,391 from holding Microsoft or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. AllDay Marts
Performance |
| Timeline |
| Microsoft |
| AllDay Marts |
Microsoft and AllDay Marts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AllDay Marts
The main advantage of trading using opposite Microsoft and AllDay Marts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AllDay Marts 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 AllDay Marts will offset losses from the drop in AllDay Marts' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| AllDay Marts vs. Cosco Capital | AllDay Marts vs. Keepers Holdings | AllDay Marts vs. GT Capital Holdings | AllDay Marts vs. Allhome 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |