Correlation Between Microsoft and Avgol Industries
Can any of the company-specific risk be diversified away by investing in both Microsoft and Avgol Industries 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 Avgol Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Avgol Industries 1953, you can compare the effects of market volatilities on Microsoft and Avgol Industries 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 Avgol Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Avgol Industries.
Diversification Opportunities for Microsoft and Avgol Industries
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Avgol is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Avgol Industries 1953 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avgol Industries 1953 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 Avgol Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avgol Industries 1953 has no effect on the direction of Microsoft i.e., Microsoft and Avgol Industries go up and down completely randomly.
Pair Corralation between Microsoft and Avgol Industries
Given the investment horizon of 90 days Microsoft is expected to under-perform the Avgol Industries. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.65 times less risky than Avgol Industries. The stock trades about -0.04 of its potential returns per unit of risk. The Avgol Industries 1953 is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 12,650 in Avgol Industries 1953 on August 27, 2024 and sell it today you would earn a total of 2,240 from holding Avgol Industries 1953 or generate 17.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Microsoft vs. Avgol Industries 1953
Performance |
| Timeline |
| Microsoft |
| Avgol Industries 1953 |
Microsoft and Avgol Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Avgol Industries
The main advantage of trading using opposite Microsoft and Avgol Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Avgol Industries 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 Avgol Industries will offset losses from the drop in Avgol Industries' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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