Correlation Between Microsoft and BANKBETF
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By analyzing existing cross correlation between Microsoft and BANKBETF, you can compare the effects of market volatilities on Microsoft and BANKBETF 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 BANKBETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and BANKBETF.
Diversification Opportunities for Microsoft and BANKBETF
Very weak diversification
The 3 months correlation between Microsoft and BANKBETF is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and BANKBETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANKBETF 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 BANKBETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANKBETF has no effect on the direction of Microsoft i.e., Microsoft and BANKBETF go up and down completely randomly.
Pair Corralation between Microsoft and BANKBETF
Given the investment horizon of 90 days Microsoft is expected to generate 0.96 times more return on investment than BANKBETF. However, Microsoft is 1.04 times less risky than BANKBETF. It trades about 0.08 of its potential returns per unit of risk. BANKBETF is currently generating about 0.06 per unit of risk. If you would invest 25,277 in Microsoft on September 3, 2024 and sell it today you would earn a total of 17,069 from holding Microsoft or generate 67.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 43.03% |
| Values | Daily Returns |
Microsoft vs. BANKBETF
Performance |
| Timeline |
| Microsoft |
| BANKBETF |
Microsoft and BANKBETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and BANKBETF
The main advantage of trading using opposite Microsoft and BANKBETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, BANKBETF 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 BANKBETF will offset losses from the drop in BANKBETF's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| BANKBETF vs. NIFTYETF | BANKBETF vs. ITETF | BANKBETF vs. ICICI Prudential Nifty | BANKBETF vs. Nippon India Mutual |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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