Correlation Between Microsoft and Aptos
Can any of the company-specific risk be diversified away by investing in both Microsoft and Aptos 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 Aptos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Aptos, you can compare the effects of market volatilities on Microsoft and Aptos 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 Aptos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Aptos.
Diversification Opportunities for Microsoft and Aptos
Significant diversification
The 3 months correlation between Microsoft and Aptos is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Aptos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptos 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 Aptos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptos has no effect on the direction of Microsoft i.e., Microsoft and Aptos go up and down completely randomly.
Pair Corralation between Microsoft and Aptos
Given the investment horizon of 90 days Microsoft is expected to generate 21.12 times less return on investment than Aptos. But when comparing it to its historical volatility, Microsoft is 4.66 times less risky than Aptos. It trades about 0.05 of its potential returns per unit of risk. Aptos is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 613.00 in Aptos on August 31, 2024 and sell it today you would earn a total of 671.00 from holding Aptos or generate 109.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Microsoft vs. Aptos
Performance |
| Timeline |
| Microsoft |
| Aptos |
Microsoft and Aptos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Aptos
The main advantage of trading using opposite Microsoft and Aptos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Aptos 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 Aptos will offset losses from the drop in Aptos' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Commodity Directory Find actively traded commodities issued by global exchanges |