Correlation Between Microsoft and Avantis Emerging
Can any of the company-specific risk be diversified away by investing in both Microsoft and Avantis Emerging 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 Avantis Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Avantis Emerging Markets, you can compare the effects of market volatilities on Microsoft and Avantis Emerging 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 Avantis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Avantis Emerging.
Diversification Opportunities for Microsoft and Avantis Emerging
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Avantis is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Avantis Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Emerging Markets 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 Avantis Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Emerging Markets has no effect on the direction of Microsoft i.e., Microsoft and Avantis Emerging go up and down completely randomly.
Pair Corralation between Microsoft and Avantis Emerging
Given the investment horizon of 90 days Microsoft is expected to generate 2.06 times more return on investment than Avantis Emerging. However, Microsoft is 2.06 times more volatile than Avantis Emerging Markets. It trades about -0.04 of its potential returns per unit of risk. Avantis Emerging Markets is currently generating about -0.15 per unit of risk. If you would invest 43,167 in Microsoft on August 31, 2024 and sell it today you would lose (868.00) from holding Microsoft or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Avantis Emerging Markets
Performance |
| Timeline |
| Microsoft |
| Avantis Emerging Markets |
Microsoft and Avantis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Avantis Emerging
The main advantage of trading using opposite Microsoft and Avantis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Avantis Emerging 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 Avantis Emerging will offset losses from the drop in Avantis Emerging's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Avantis Emerging vs. Goldman Sachs Government | Avantis Emerging vs. Us Government Plus | Avantis Emerging vs. Franklin Adjustable Government | Avantis Emerging vs. Short Term Government Fund |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |