Correlation Between Microsoft and Altair International
Can any of the company-specific risk be diversified away by investing in both Microsoft and Altair International 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 Altair International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Altair International Corp, you can compare the effects of market volatilities on Microsoft and Altair International 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 Altair International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Altair International.
Diversification Opportunities for Microsoft and Altair International
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Altair is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Altair International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair International Corp 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 Altair International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair International Corp has no effect on the direction of Microsoft i.e., Microsoft and Altair International go up and down completely randomly.
Pair Corralation between Microsoft and Altair International
Given the investment horizon of 90 days Microsoft is expected to generate 10.81 times less return on investment than Altair International. But when comparing it to its historical volatility, Microsoft is 12.65 times less risky than Altair International. It trades about 0.07 of its potential returns per unit of risk. Altair International Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Altair International Corp on December 1, 2024 and sell it today you would lose (11.60) from holding Altair International Corp or give up 77.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Altair International Corp
Performance |
| Timeline |
| Microsoft |
| Altair International Corp |
Microsoft and Altair International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Altair International
The main advantage of trading using opposite Microsoft and Altair International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Altair International 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 Altair International will offset losses from the drop in Altair International's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Altair International vs. Atco Mining | Altair International vs. Bitterroot Resources | Altair International vs. Avarone Metals | Altair International vs. Huntsman Exploration |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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