Correlation Between Microsoft and Boston Partners
Can any of the company-specific risk be diversified away by investing in both Microsoft and Boston Partners 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 Boston Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Boston Partners Longshort, you can compare the effects of market volatilities on Microsoft and Boston Partners 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 Boston Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Boston Partners.
Diversification Opportunities for Microsoft and Boston Partners
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Boston is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Boston Partners Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Partners Longshort 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 Boston Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Partners Longshort has no effect on the direction of Microsoft i.e., Microsoft and Boston Partners go up and down completely randomly.
Pair Corralation between Microsoft and Boston Partners
Given the investment horizon of 90 days Microsoft is expected to under-perform the Boston Partners. In addition to that, Microsoft is 3.06 times more volatile than Boston Partners Longshort. It trades about -0.06 of its total potential returns per unit of risk. Boston Partners Longshort is currently generating about 0.24 per unit of volatility. If you would invest 1,511 in Boston Partners Longshort on August 26, 2024 and sell it today you would earn a total of 43.00 from holding Boston Partners Longshort or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Boston Partners Longshort
Performance |
| Timeline |
| Microsoft |
| Boston Partners Longshort |
Microsoft and Boston Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Boston Partners
The main advantage of trading using opposite Microsoft and Boston Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Boston Partners 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 Boston Partners will offset losses from the drop in Boston Partners' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Boston Partners vs. Aqr Managed Futures | Boston Partners vs. Neuberger Berman Long | Boston Partners vs. Asg Managed Futures | Boston Partners vs. Marketfield Fund Marketfield |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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