Correlation Between Microsoft and Ab Select
Can any of the company-specific risk be diversified away by investing in both Microsoft and Ab Select 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 Ab Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Ab Select Longshort, you can compare the effects of market volatilities on Microsoft and Ab Select 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 Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Ab Select.
Diversification Opportunities for Microsoft and Ab Select
Modest diversification
The 3 months correlation between Microsoft and ASCLX is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Ab Select Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Longshort 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 Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Longshort has no effect on the direction of Microsoft i.e., Microsoft and Ab Select go up and down completely randomly.
Pair Corralation between Microsoft and Ab Select
Given the investment horizon of 90 days Microsoft is expected to under-perform the Ab Select. In addition to that, Microsoft is 2.7 times more volatile than Ab Select Longshort. It trades about -0.08 of its total potential returns per unit of risk. Ab Select Longshort is currently generating about 0.09 per unit of volatility. If you would invest 1,378 in Ab Select Longshort on August 23, 2024 and sell it today you would earn a total of 16.00 from holding Ab Select Longshort or generate 1.16% 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. Ab Select Longshort
Performance |
| Timeline |
| Microsoft |
| Ab Select Longshort |
Microsoft and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Ab Select
The main advantage of trading using opposite Microsoft and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Ab Select 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 Ab Select will offset losses from the drop in Ab Select's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Ab Select vs. Ab Bond Inflation | Ab Select vs. Simt Multi Asset Inflation | Ab Select vs. Schwab Treasury Inflation | Ab Select vs. Siit Real Return |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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