Correlation Between Microsoft and Conestoga Micro
Can any of the company-specific risk be diversified away by investing in both Microsoft and Conestoga Micro 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 Conestoga Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Conestoga Micro Cap, you can compare the effects of market volatilities on Microsoft and Conestoga Micro 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 Conestoga Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Conestoga Micro.
Diversification Opportunities for Microsoft and Conestoga Micro
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Conestoga is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Conestoga Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conestoga Micro Cap 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 Conestoga Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conestoga Micro Cap has no effect on the direction of Microsoft i.e., Microsoft and Conestoga Micro go up and down completely randomly.
Pair Corralation between Microsoft and Conestoga Micro
Given the investment horizon of 90 days Microsoft is expected to generate 0.97 times more return on investment than Conestoga Micro. However, Microsoft is 1.03 times less risky than Conestoga Micro. It trades about 0.08 of its potential returns per unit of risk. Conestoga Micro Cap is currently generating about 0.02 per unit of risk. If you would invest 25,277 in Microsoft on September 3, 2024 and sell it today you would earn a total of 17,821 from holding Microsoft or generate 70.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Conestoga Micro Cap
Performance |
| Timeline |
| Microsoft |
| Conestoga Micro Cap |
Microsoft and Conestoga Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Conestoga Micro
The main advantage of trading using opposite Microsoft and Conestoga Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Conestoga Micro 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 Conestoga Micro will offset losses from the drop in Conestoga Micro's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Conestoga Micro vs. The Hartford Midcap | Conestoga Micro vs. Mfs Emerging Markets | Conestoga Micro vs. Wells Fargo Special | Conestoga Micro vs. Washington Mutual Investors |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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