Correlation Between Microsoft and Annovis Bio
Can any of the company-specific risk be diversified away by investing in both Microsoft and Annovis Bio 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 Annovis Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Annovis Bio, you can compare the effects of market volatilities on Microsoft and Annovis Bio 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 Annovis Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Annovis Bio.
Diversification Opportunities for Microsoft and Annovis Bio
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Annovis is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Annovis Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annovis Bio 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 Annovis Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annovis Bio has no effect on the direction of Microsoft i.e., Microsoft and Annovis Bio go up and down completely randomly.
Pair Corralation between Microsoft and Annovis Bio
Given the investment horizon of 90 days Microsoft is expected to generate 0.65 times more return on investment than Annovis Bio. However, Microsoft is 1.53 times less risky than Annovis Bio. It trades about -0.06 of its potential returns per unit of risk. Annovis Bio is currently generating about -0.68 per unit of risk. If you would invest 42,729 in Microsoft on August 26, 2024 and sell it today you would lose (1,029) from holding Microsoft or give up 2.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Annovis Bio
Performance |
| Timeline |
| Microsoft |
| Annovis Bio |
Microsoft and Annovis Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Annovis Bio
The main advantage of trading using opposite Microsoft and Annovis Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Annovis Bio 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 Annovis Bio will offset losses from the drop in Annovis Bio's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Annovis Bio vs. Eliem Therapeutics | Annovis Bio vs. HCW Biologics | Annovis Bio vs. Scpharmaceuticals | Annovis Bio vs. Milestone Pharmaceuticals |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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