Correlation Between Microsoft and ATAI Life
Can any of the company-specific risk be diversified away by investing in both Microsoft and ATAI Life 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 ATAI Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ATAI Life Sciences, you can compare the effects of market volatilities on Microsoft and ATAI Life 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 ATAI Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ATAI Life.
Diversification Opportunities for Microsoft and ATAI Life
Significant diversification
The 3 months correlation between Microsoft and ATAI is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ATAI Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATAI Life Sciences 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 ATAI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATAI Life Sciences has no effect on the direction of Microsoft i.e., Microsoft and ATAI Life go up and down completely randomly.
Pair Corralation between Microsoft and ATAI Life
Given the investment horizon of 90 days Microsoft is expected to generate 1.6 times less return on investment than ATAI Life. But when comparing it to its historical volatility, Microsoft is 4.06 times less risky than ATAI Life. It trades about 0.06 of its potential returns per unit of risk. ATAI Life Sciences is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 175.00 in ATAI Life Sciences on September 1, 2024 and sell it today you would lose (2.00) from holding ATAI Life Sciences or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. ATAI Life Sciences
Performance |
| Timeline |
| Microsoft |
| ATAI Life Sciences |
Microsoft and ATAI Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ATAI Life
The main advantage of trading using opposite Microsoft and ATAI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ATAI Life 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 ATAI Life will offset losses from the drop in ATAI Life's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| ATAI Life vs. Mind Medicine | ATAI Life vs. Seelos Therapeutics | ATAI Life vs. GH Research PLC | ATAI Life vs. Cybin Inc |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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