Correlation Between Microsoft and Blackrock Inflation
Can any of the company-specific risk be diversified away by investing in both Microsoft and Blackrock Inflation 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 Blackrock Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Blackrock Inflation Protected, you can compare the effects of market volatilities on Microsoft and Blackrock Inflation 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 Blackrock Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Blackrock Inflation.
Diversification Opportunities for Microsoft and Blackrock Inflation
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Blackrock is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Blackrock Inflation Protected in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Inflation 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 Blackrock Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Inflation has no effect on the direction of Microsoft i.e., Microsoft and Blackrock Inflation go up and down completely randomly.
Pair Corralation between Microsoft and Blackrock Inflation
Given the investment horizon of 90 days Microsoft is expected to generate 4.68 times more return on investment than Blackrock Inflation. However, Microsoft is 4.68 times more volatile than Blackrock Inflation Protected. It trades about 0.02 of its potential returns per unit of risk. Blackrock Inflation Protected is currently generating about 0.08 per unit of risk. If you would invest 41,356 in Microsoft on August 29, 2024 and sell it today you would earn a total of 943.00 from holding Microsoft or generate 2.28% 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. Blackrock Inflation Protected
Performance |
| Timeline |
| Microsoft |
| Blackrock Inflation |
Microsoft and Blackrock Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Blackrock Inflation
The main advantage of trading using opposite Microsoft and Blackrock Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Blackrock Inflation 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 Blackrock Inflation will offset losses from the drop in Blackrock Inflation's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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