Correlation Between Microsoft and Blue Capital
Can any of the company-specific risk be diversified away by investing in both Microsoft and Blue Capital 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 Blue Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Blue Capital Reinsurance, you can compare the effects of market volatilities on Microsoft and Blue Capital 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 Blue Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Blue Capital.
Diversification Opportunities for Microsoft and Blue Capital
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Blue is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Blue Capital Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Capital Reinsurance 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 Blue Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Capital Reinsurance has no effect on the direction of Microsoft i.e., Microsoft and Blue Capital go up and down completely randomly.
Pair Corralation between Microsoft and Blue Capital
If you would invest 36,820 in Microsoft on September 2, 2024 and sell it today you would earn a total of 5,526 from holding Microsoft or generate 15.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.4% |
| Values | Daily Returns |
Microsoft vs. Blue Capital Reinsurance
Performance |
| Timeline |
| Microsoft |
| Blue Capital Reinsurance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Blue Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Blue Capital
The main advantage of trading using opposite Microsoft and Blue Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Blue Capital 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 Blue Capital will offset losses from the drop in Blue Capital's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Blue Capital vs. Eastman Chemical | Blue Capital vs. Chemours Co | Blue Capital vs. The Mosaic | Blue Capital vs. CF Industries Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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