Correlation Between Microsoft and Streamwide
Can any of the company-specific risk be diversified away by investing in both Microsoft and Streamwide 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 Streamwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Streamwide, you can compare the effects of market volatilities on Microsoft and Streamwide 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 Streamwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Streamwide.
Diversification Opportunities for Microsoft and Streamwide
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Streamwide is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Streamwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Streamwide 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 Streamwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Streamwide has no effect on the direction of Microsoft i.e., Microsoft and Streamwide go up and down completely randomly.
Pair Corralation between Microsoft and Streamwide
Given the investment horizon of 90 days Microsoft is expected to under-perform the Streamwide. In addition to that, Microsoft is 1.06 times more volatile than Streamwide. It trades about -0.06 of its total potential returns per unit of risk. Streamwide is currently generating about 0.04 per unit of volatility. If you would invest 2,820 in Streamwide on August 26, 2024 and sell it today you would earn a total of 30.00 from holding Streamwide or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Streamwide
Performance |
| Timeline |
| Microsoft |
| Streamwide |
Microsoft and Streamwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Streamwide
The main advantage of trading using opposite Microsoft and Streamwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Streamwide 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 Streamwide will offset losses from the drop in Streamwide's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
| Streamwide vs. Sartorius Stedim Biotech | Streamwide vs. Lectra SA | Streamwide vs. Teleperformance SE | Streamwide vs. Trigano SA |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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