Correlation Between Microsoft and AXA World
Can any of the company-specific risk be diversified away by investing in both Microsoft and AXA World 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 AXA World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AXA World Funds, you can compare the effects of market volatilities on Microsoft and AXA World 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 AXA World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AXA World.
Diversification Opportunities for Microsoft and AXA World
Average diversification
The 3 months correlation between Microsoft and AXA is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AXA World Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA World Funds 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 AXA World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA World Funds has no effect on the direction of Microsoft i.e., Microsoft and AXA World go up and down completely randomly.
Pair Corralation between Microsoft and AXA World
Given the investment horizon of 90 days Microsoft is expected to generate 2.86 times more return on investment than AXA World. However, Microsoft is 2.86 times more volatile than AXA World Funds. It trades about 0.09 of its potential returns per unit of risk. AXA World Funds is currently generating about 0.03 per unit of risk. If you would invest 23,466 in Microsoft on September 3, 2024 and sell it today you would earn a total of 18,880 from holding Microsoft or generate 80.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.58% |
| Values | Daily Returns |
Microsoft vs. AXA World Funds
Performance |
| Timeline |
| Microsoft |
| AXA World Funds |
Microsoft and AXA World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AXA World
The main advantage of trading using opposite Microsoft and AXA World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AXA World 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 AXA World will offset losses from the drop in AXA World's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| AXA World vs. AXA World Funds | AXA World vs. AXA World Funds | AXA World vs. Esfera Robotics R | AXA World vs. R co Valor F |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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