Correlation Between Microsoft and Cm Commodity
Can any of the company-specific risk be diversified away by investing in both Microsoft and Cm Commodity 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 Cm Commodity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Cm Modity Index, you can compare the effects of market volatilities on Microsoft and Cm Commodity 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 Cm Commodity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Cm Commodity.
Diversification Opportunities for Microsoft and Cm Commodity
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and CMCYX is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Cm Modity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cm Modity Index 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 Cm Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cm Modity Index has no effect on the direction of Microsoft i.e., Microsoft and Cm Commodity go up and down completely randomly.
Pair Corralation between Microsoft and Cm Commodity
Given the investment horizon of 90 days Microsoft is expected to generate 4.05 times less return on investment than Cm Commodity. In addition to that, Microsoft is 2.0 times more volatile than Cm Modity Index. It trades about 0.01 of its total potential returns per unit of risk. Cm Modity Index is currently generating about 0.05 per unit of volatility. If you would invest 6,507 in Cm Modity Index on November 7, 2024 and sell it today you would earn a total of 549.00 from holding Cm Modity Index or generate 8.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Microsoft vs. Cm Modity Index
Performance |
| Timeline |
| Microsoft |
| Cm Modity Index |
Microsoft and Cm Commodity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Cm Commodity
The main advantage of trading using opposite Microsoft and Cm Commodity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Cm Commodity 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 Cm Commodity will offset losses from the drop in Cm Commodity's long position.| Microsoft vs. Crowdstrike Holdings | Microsoft vs. Okta Inc | Microsoft vs. Cloudflare | Microsoft vs. MongoDB |
| Cm Commodity vs. Jhancock Short Duration | Cm Commodity vs. Goldman Sachs Short | Cm Commodity vs. Virtus Multi Sector Short | Cm Commodity vs. Leader Short Term Bond |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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