Correlation Between Microsoft and Calvert Global
Can any of the company-specific risk be diversified away by investing in both Microsoft and Calvert Global 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 Calvert Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Calvert Global Water, you can compare the effects of market volatilities on Microsoft and Calvert Global 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 Calvert Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Calvert Global.
Diversification Opportunities for Microsoft and Calvert Global
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Calvert is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Calvert Global Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Global Water 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 Calvert Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Global Water has no effect on the direction of Microsoft i.e., Microsoft and Calvert Global go up and down completely randomly.
Pair Corralation between Microsoft and Calvert Global
Given the investment horizon of 90 days Microsoft is expected to generate 1.67 times more return on investment than Calvert Global. However, Microsoft is 1.67 times more volatile than Calvert Global Water. It trades about 0.09 of its potential returns per unit of risk. Calvert Global Water is currently generating about 0.05 per unit of risk. If you would invest 24,341 in Microsoft on August 29, 2024 and sell it today you would earn a total of 18,458 from holding Microsoft or generate 75.83% 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. Calvert Global Water
Performance |
| Timeline |
| Microsoft |
| Calvert Global Water |
Microsoft and Calvert Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Calvert Global
The main advantage of trading using opposite Microsoft and Calvert Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Calvert Global 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 Calvert Global will offset losses from the drop in Calvert Global's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Calvert Global vs. Calvert Small Cap | Calvert Global vs. Calvert Global Energy | Calvert Global vs. Calvert Equity Portfolio |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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