Correlation Between Microsoft and CARGOJET INC
Can any of the company-specific risk be diversified away by investing in both Microsoft and CARGOJET INC 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 CARGOJET INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CARGOJET INC VAR, you can compare the effects of market volatilities on Microsoft and CARGOJET INC 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 CARGOJET INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CARGOJET INC.
Diversification Opportunities for Microsoft and CARGOJET INC
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and CARGOJET is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CARGOJET INC VAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARGOJET INC VAR 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 CARGOJET INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARGOJET INC VAR has no effect on the direction of Microsoft i.e., Microsoft and CARGOJET INC go up and down completely randomly.
Pair Corralation between Microsoft and CARGOJET INC
Given the investment horizon of 90 days Microsoft is expected to generate 3.26 times less return on investment than CARGOJET INC. But when comparing it to its historical volatility, Microsoft is 1.53 times less risky than CARGOJET INC. It trades about 0.02 of its potential returns per unit of risk. CARGOJET INC VAR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,263 in CARGOJET INC VAR on September 1, 2024 and sell it today you would earn a total of 787.00 from holding CARGOJET INC VAR or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.92% |
| Values | Daily Returns |
Microsoft vs. CARGOJET INC VAR
Performance |
| Timeline |
| Microsoft |
| CARGOJET INC VAR |
Microsoft and CARGOJET INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and CARGOJET INC
The main advantage of trading using opposite Microsoft and CARGOJET INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CARGOJET INC 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 CARGOJET INC will offset losses from the drop in CARGOJET INC's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| CARGOJET INC vs. Silicon Motion Technology | CARGOJET INC vs. SEKISUI CHEMICAL | CARGOJET INC vs. INTERCONT HOTELS | CARGOJET INC vs. Xenia Hotels Resorts |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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