Correlation Between Microsoft and Breeze Holdings
Can any of the company-specific risk be diversified away by investing in both Microsoft and Breeze Holdings 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 Breeze Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Breeze Holdings Acquisition, you can compare the effects of market volatilities on Microsoft and Breeze Holdings 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 Breeze Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Breeze Holdings.
Diversification Opportunities for Microsoft and Breeze Holdings
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Breeze is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Breeze Holdings Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Breeze Holdings Acqu 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 Breeze Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Breeze Holdings Acqu has no effect on the direction of Microsoft i.e., Microsoft and Breeze Holdings go up and down completely randomly.
Pair Corralation between Microsoft and Breeze Holdings
Given the investment horizon of 90 days Microsoft is expected to generate 36.42 times less return on investment than Breeze Holdings. But when comparing it to its historical volatility, Microsoft is 11.48 times less risky than Breeze Holdings. It trades about 0.07 of its potential returns per unit of risk. Breeze Holdings Acquisition is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 6.42 in Breeze Holdings Acquisition on August 26, 2024 and sell it today you would earn a total of 15.58 from holding Breeze Holdings Acquisition or generate 242.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 13.71% |
| Values | Daily Returns |
Microsoft vs. Breeze Holdings Acquisition
Performance |
| Timeline |
| Microsoft |
| Breeze Holdings Acqu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Breeze Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Breeze Holdings
The main advantage of trading using opposite Microsoft and Breeze Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Breeze Holdings 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 Breeze Holdings will offset losses from the drop in Breeze Holdings' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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