Correlation Between Microsoft and Baron Global
Can any of the company-specific risk be diversified away by investing in both Microsoft and Baron Global 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 Baron Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Baron Global Advantage, you can compare the effects of market volatilities on Microsoft and Baron Global 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 Baron Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Baron Global.
Diversification Opportunities for Microsoft and Baron Global
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Baron is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Baron Global Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Global Advantage 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 Baron Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Global Advantage has no effect on the direction of Microsoft i.e., Microsoft and Baron Global go up and down completely randomly.
Pair Corralation between Microsoft and Baron Global
Given the investment horizon of 90 days Microsoft is expected to generate 11.26 times less return on investment than Baron Global. In addition to that, Microsoft is 1.52 times more volatile than Baron Global Advantage. It trades about 0.02 of its total potential returns per unit of risk. Baron Global Advantage is currently generating about 0.38 per unit of volatility. If you would invest 3,652 in Baron Global Advantage on August 28, 2024 and sell it today you would earn a total of 363.00 from holding Baron Global Advantage or generate 9.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Baron Global Advantage
Performance |
| Timeline |
| Microsoft |
| Baron Global Advantage |
Microsoft and Baron Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Baron Global
The main advantage of trading using opposite Microsoft and Baron Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Baron Global 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 Baron Global will offset losses from the drop in Baron Global's 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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