Correlation Between Microsoft and Alger 35
Can any of the company-specific risk be diversified away by investing in both Microsoft and Alger 35 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 Alger 35 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Alger 35 ETF, you can compare the effects of market volatilities on Microsoft and Alger 35 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 Alger 35. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Alger 35.
Diversification Opportunities for Microsoft and Alger 35
Average diversification
The 3 months correlation between Microsoft and Alger is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Alger 35 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger 35 ETF 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 Alger 35. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger 35 ETF has no effect on the direction of Microsoft i.e., Microsoft and Alger 35 go up and down completely randomly.
Pair Corralation between Microsoft and Alger 35
Given the investment horizon of 90 days Microsoft is expected to generate 1.17 times less return on investment than Alger 35. In addition to that, Microsoft is 1.03 times more volatile than Alger 35 ETF. It trades about 0.08 of its total potential returns per unit of risk. Alger 35 ETF is currently generating about 0.1 per unit of volatility. If you would invest 1,347 in Alger 35 ETF on August 26, 2024 and sell it today you would earn a total of 1,173 from holding Alger 35 ETF or generate 87.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Alger 35 ETF
Performance |
| Timeline |
| Microsoft |
| Alger 35 ETF |
Microsoft and Alger 35 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Alger 35
The main advantage of trading using opposite Microsoft and Alger 35 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Alger 35 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 Alger 35 will offset losses from the drop in Alger 35's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Alger 35 vs. Sterling Capital Focus | Alger 35 vs. Northern Lights | Alger 35 vs. AdvisorShares Dorsey Wright | Alger 35 vs. 6 Meridian Quality |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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