Correlation Between Microsoft and Astoria Investments
Can any of the company-specific risk be diversified away by investing in both Microsoft and Astoria Investments 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 Astoria Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Astoria Investments, you can compare the effects of market volatilities on Microsoft and Astoria Investments 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 Astoria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Astoria Investments.
Diversification Opportunities for Microsoft and Astoria Investments
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Astoria is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Astoria Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astoria Investments 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 Astoria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astoria Investments has no effect on the direction of Microsoft i.e., Microsoft and Astoria Investments go up and down completely randomly.
Pair Corralation between Microsoft and Astoria Investments
Given the investment horizon of 90 days Microsoft is expected to generate 6.02 times less return on investment than Astoria Investments. But when comparing it to its historical volatility, Microsoft is 2.53 times less risky than Astoria Investments. It trades about 0.02 of its potential returns per unit of risk. Astoria Investments is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 70,500 in Astoria Investments on August 30, 2024 and sell it today you would earn a total of 12,000 from holding Astoria Investments or generate 17.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Astoria Investments
Performance |
| Timeline |
| Microsoft |
| Astoria Investments |
Microsoft and Astoria Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Astoria Investments
The main advantage of trading using opposite Microsoft and Astoria Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Astoria Investments 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 Astoria Investments will offset losses from the drop in Astoria Investments' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Astoria Investments vs. Remgro | Astoria Investments vs. Brait SE | Astoria Investments vs. Zeder Investments |
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 Stocks Directory module to find actively traded stocks across global markets.
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