Correlation Between Microsoft and Salomon A
Can any of the company-specific risk be diversified away by investing in both Microsoft and Salomon A 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 Salomon A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Salomon A Angel, you can compare the effects of market volatilities on Microsoft and Salomon A 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 Salomon A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Salomon A.
Diversification Opportunities for Microsoft and Salomon A
Average diversification
The 3 months correlation between Microsoft and Salomon is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Salomon A Angel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salomon A Angel 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 Salomon A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salomon A Angel has no effect on the direction of Microsoft i.e., Microsoft and Salomon A go up and down completely randomly.
Pair Corralation between Microsoft and Salomon A
Given the investment horizon of 90 days Microsoft is expected to generate 0.36 times more return on investment than Salomon A. However, Microsoft is 2.79 times less risky than Salomon A. It trades about 0.02 of its potential returns per unit of risk. Salomon A Angel is currently generating about 0.01 per unit of risk. If you would invest 41,195 in Microsoft on August 30, 2024 and sell it today you would earn a total of 1,104 from holding Microsoft or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 75.4% |
| Values | Daily Returns |
Microsoft vs. Salomon A Angel
Performance |
| Timeline |
| Microsoft |
| Salomon A Angel |
Microsoft and Salomon A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Salomon A
The main advantage of trading using opposite Microsoft and Salomon A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Salomon A 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 Salomon A will offset losses from the drop in Salomon A's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Salomon A vs. Zanlakol | Salomon A vs. Gan Shmuel | Salomon A vs. Carmit | Salomon A vs. Sano Brunos Enterprises |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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