Correlation Between Microsoft and Baron Opportunity
Can any of the company-specific risk be diversified away by investing in both Microsoft and Baron Opportunity 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 Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Baron Opportunity Fund, you can compare the effects of market volatilities on Microsoft and Baron Opportunity 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 Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Baron Opportunity.
Diversification Opportunities for Microsoft and Baron Opportunity
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Baron is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Baron Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Opportunity 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 Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Opportunity has no effect on the direction of Microsoft i.e., Microsoft and Baron Opportunity go up and down completely randomly.
Pair Corralation between Microsoft and Baron Opportunity
Given the investment horizon of 90 days Microsoft is expected to generate 16.43 times less return on investment than Baron Opportunity. In addition to that, Microsoft is 1.22 times more volatile than Baron Opportunity Fund. It trades about 0.01 of its total potential returns per unit of risk. Baron Opportunity Fund is currently generating about 0.2 per unit of volatility. If you would invest 4,401 in Baron Opportunity Fund on August 28, 2024 and sell it today you would earn a total of 447.00 from holding Baron Opportunity Fund or generate 10.16% 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. Baron Opportunity Fund
Performance |
| Timeline |
| Microsoft |
| Baron Opportunity |
Microsoft and Baron Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Baron Opportunity
The main advantage of trading using opposite Microsoft and Baron Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Baron Opportunity 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 Opportunity will offset losses from the drop in Baron Opportunity's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Baron Opportunity vs. Baron Global Advantage | Baron Opportunity vs. Baron Focused Growth | Baron Opportunity vs. Baron Discovery Fund |
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.
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