Correlation Between Microsoft and Horizon Active
Can any of the company-specific risk be diversified away by investing in both Microsoft and Horizon Active 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 Horizon Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Horizon Active Risk, you can compare the effects of market volatilities on Microsoft and Horizon Active 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 Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Horizon Active.
Diversification Opportunities for Microsoft and Horizon Active
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Horizon is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Horizon Active Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Risk 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 Horizon Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Active Risk has no effect on the direction of Microsoft i.e., Microsoft and Horizon Active go up and down completely randomly.
Pair Corralation between Microsoft and Horizon Active
Given the investment horizon of 90 days Microsoft is expected to under-perform the Horizon Active. In addition to that, Microsoft is 2.54 times more volatile than Horizon Active Risk. It trades about -0.04 of its total potential returns per unit of risk. Horizon Active Risk is currently generating about 0.04 per unit of volatility. If you would invest 2,696 in Horizon Active Risk on August 27, 2024 and sell it today you would earn a total of 15.00 from holding Horizon Active Risk or generate 0.56% 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. Horizon Active Risk
Performance |
| Timeline |
| Microsoft |
| Horizon Active Risk |
Microsoft and Horizon Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Horizon Active
The main advantage of trading using opposite Microsoft and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Horizon Active 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 Horizon Active will offset losses from the drop in Horizon Active's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Horizon Active vs. Horizon Active Asset | Horizon Active vs. Horizon Active Dividend | Horizon Active vs. Horizon Defined Risk | Horizon Active vs. Horizon Defensive Equity |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |