Correlation Between Microsoft and Hawaii Municipal
Can any of the company-specific risk be diversified away by investing in both Microsoft and Hawaii Municipal 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 Hawaii Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Hawaii Municipal Bond, you can compare the effects of market volatilities on Microsoft and Hawaii Municipal 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 Hawaii Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Hawaii Municipal.
Diversification Opportunities for Microsoft and Hawaii Municipal
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and HAWAII is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Hawaii Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaii Municipal Bond 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 Hawaii Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaii Municipal Bond has no effect on the direction of Microsoft i.e., Microsoft and Hawaii Municipal go up and down completely randomly.
Pair Corralation between Microsoft and Hawaii Municipal
Given the investment horizon of 90 days Microsoft is expected to generate 6.78 times more return on investment than Hawaii Municipal. However, Microsoft is 6.78 times more volatile than Hawaii Municipal Bond. It trades about 0.07 of its potential returns per unit of risk. Hawaii Municipal Bond is currently generating about -0.08 per unit of risk. If you would invest 41,700 in Microsoft on October 23, 2024 and sell it today you would earn a total of 1,203 from holding Microsoft or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Hawaii Municipal Bond
Performance |
| Timeline |
| Microsoft |
| Hawaii Municipal Bond |
Microsoft and Hawaii Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Hawaii Municipal
The main advantage of trading using opposite Microsoft and Hawaii Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Hawaii Municipal 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 Hawaii Municipal will offset losses from the drop in Hawaii Municipal's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
| Hawaii Municipal vs. Us Global Investors | Hawaii Municipal vs. Gmo Global Equity | Hawaii Municipal vs. Rbc Global Equity | Hawaii Municipal vs. Investec Global Franchise |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |