Correlation Between Microsoft and Bel Fuse
Can any of the company-specific risk be diversified away by investing in both Microsoft and Bel Fuse 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 Bel Fuse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Bel Fuse A, you can compare the effects of market volatilities on Microsoft and Bel Fuse 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 Bel Fuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bel Fuse.
Diversification Opportunities for Microsoft and Bel Fuse
Weak diversification
The 3 months correlation between Microsoft and Bel is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bel Fuse A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse A 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 Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse A has no effect on the direction of Microsoft i.e., Microsoft and Bel Fuse go up and down completely randomly.
Pair Corralation between Microsoft and Bel Fuse
Given the investment horizon of 90 days Microsoft is expected to generate 0.81 times more return on investment than Bel Fuse. However, Microsoft is 1.23 times less risky than Bel Fuse. It trades about -0.04 of its potential returns per unit of risk. Bel Fuse A is currently generating about -0.13 per unit of risk. If you would invest 42,574 in Microsoft on August 28, 2024 and sell it today you would lose (695.00) from holding Microsoft or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Bel Fuse A
Performance |
| Timeline |
| Microsoft |
| Bel Fuse A |
Microsoft and Bel Fuse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Bel Fuse
The main advantage of trading using opposite Microsoft and Bel Fuse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Bel Fuse 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 Bel Fuse will offset losses from the drop in Bel Fuse's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Bel Fuse vs. Richardson Electronics | Bel Fuse vs. LSI Industries | Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Plexus Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |