Correlation Between Microsoft and Capital Point
Can any of the company-specific risk be diversified away by investing in both Microsoft and Capital Point 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 Capital Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Capital Point, you can compare the effects of market volatilities on Microsoft and Capital Point 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 Capital Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Capital Point.
Diversification Opportunities for Microsoft and Capital Point
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Capital is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Capital Point in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Point 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 Capital Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Point has no effect on the direction of Microsoft i.e., Microsoft and Capital Point go up and down completely randomly.
Pair Corralation between Microsoft and Capital Point
Given the investment horizon of 90 days Microsoft is expected to generate 0.7 times more return on investment than Capital Point. However, Microsoft is 1.43 times less risky than Capital Point. It trades about 0.07 of its potential returns per unit of risk. Capital Point is currently generating about -0.03 per unit of risk. If you would invest 32,373 in Microsoft on August 26, 2024 and sell it today you would earn a total of 9,327 from holding Microsoft or generate 28.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.48% |
| Values | Daily Returns |
Microsoft vs. Capital Point
Performance |
| Timeline |
| Microsoft |
| Capital Point |
Microsoft and Capital Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Capital Point
The main advantage of trading using opposite Microsoft and Capital Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Capital Point 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 Capital Point will offset losses from the drop in Capital Point's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Capital Point vs. IDI Insurance | Capital Point vs. Eldav L | Capital Point vs. Migdal Insurance | Capital Point vs. Mivtach Shamir |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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