Correlation Between Microsoft and Apollo Bancorp
Can any of the company-specific risk be diversified away by investing in both Microsoft and Apollo Bancorp 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 Apollo Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Apollo Bancorp, you can compare the effects of market volatilities on Microsoft and Apollo Bancorp 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 Apollo Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Apollo Bancorp.
Diversification Opportunities for Microsoft and Apollo Bancorp
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Apollo is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Apollo Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Bancorp 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 Apollo Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Bancorp has no effect on the direction of Microsoft i.e., Microsoft and Apollo Bancorp go up and down completely randomly.
Pair Corralation between Microsoft and Apollo Bancorp
Given the investment horizon of 90 days Microsoft is expected to generate 1.14 times less return on investment than Apollo Bancorp. But when comparing it to its historical volatility, Microsoft is 1.32 times less risky than Apollo Bancorp. It trades about 0.03 of its potential returns per unit of risk. Apollo Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,570 in Apollo Bancorp on August 28, 2024 and sell it today you would earn a total of 80.00 from holding Apollo Bancorp or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Apollo Bancorp
Performance |
| Timeline |
| Microsoft |
| Apollo Bancorp |
Microsoft and Apollo Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Apollo Bancorp
The main advantage of trading using opposite Microsoft and Apollo Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Apollo Bancorp 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 Apollo Bancorp will offset losses from the drop in Apollo Bancorp's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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