Correlation Between Microsoft and Auddia
Can any of the company-specific risk be diversified away by investing in both Microsoft and Auddia 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 Auddia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Auddia Inc, you can compare the effects of market volatilities on Microsoft and Auddia 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 Auddia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Auddia.
Diversification Opportunities for Microsoft and Auddia
Good diversification
The 3 months correlation between Microsoft and Auddia is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Auddia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auddia Inc 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 Auddia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auddia Inc has no effect on the direction of Microsoft i.e., Microsoft and Auddia go up and down completely randomly.
Pair Corralation between Microsoft and Auddia
Given the investment horizon of 90 days Microsoft is expected to under-perform the Auddia. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 10.96 times less risky than Auddia. The stock trades about -0.04 of its potential returns per unit of risk. The Auddia Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Auddia Inc on August 28, 2024 and sell it today you would lose (0.26) from holding Auddia Inc or give up 8.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 57.14% |
| Values | Daily Returns |
Microsoft vs. Auddia Inc
Performance |
| Timeline |
| Microsoft |
| Auddia Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Microsoft and Auddia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Auddia
The main advantage of trading using opposite Microsoft and Auddia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Auddia 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 Auddia will offset losses from the drop in Auddia's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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