Correlation Between Microsoft and Cornerstone Advisors
Can any of the company-specific risk be diversified away by investing in both Microsoft and Cornerstone Advisors 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 Cornerstone Advisors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Cornerstone Advisors Real, you can compare the effects of market volatilities on Microsoft and Cornerstone Advisors 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 Cornerstone Advisors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Cornerstone Advisors.
Diversification Opportunities for Microsoft and Cornerstone Advisors
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Cornerstone is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Cornerstone Advisors Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Advisors Real 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 Cornerstone Advisors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Advisors Real has no effect on the direction of Microsoft i.e., Microsoft and Cornerstone Advisors go up and down completely randomly.
Pair Corralation between Microsoft and Cornerstone Advisors
Given the investment horizon of 90 days Microsoft is expected to generate 1.42 times more return on investment than Cornerstone Advisors. However, Microsoft is 1.42 times more volatile than Cornerstone Advisors Real. It trades about 0.19 of its potential returns per unit of risk. Cornerstone Advisors Real is currently generating about 0.24 per unit of risk. If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Cornerstone Advisors Real
Performance |
| Timeline |
| Microsoft |
| Cornerstone Advisors Real |
Microsoft and Cornerstone Advisors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Cornerstone Advisors
The main advantage of trading using opposite Microsoft and Cornerstone Advisors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Cornerstone Advisors 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 Cornerstone Advisors will offset losses from the drop in Cornerstone Advisors' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Cornerstone Advisors vs. Domini Impact Bond | Cornerstone Advisors vs. Domini Impact International | Cornerstone Advisors vs. Amer Beacon Ark | Cornerstone Advisors vs. Domini International Opportunities |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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