Correlation Between Microsoft and Crosswood
Can any of the company-specific risk be diversified away by investing in both Microsoft and Crosswood 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 Crosswood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Crosswood, you can compare the effects of market volatilities on Microsoft and Crosswood 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 Crosswood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Crosswood.
Diversification Opportunities for Microsoft and Crosswood
Significant diversification
The 3 months correlation between Microsoft and Crosswood is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Crosswood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crosswood 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 Crosswood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crosswood has no effect on the direction of Microsoft i.e., Microsoft and Crosswood go up and down completely randomly.
Pair Corralation between Microsoft and Crosswood
Given the investment horizon of 90 days Microsoft is expected to generate 0.27 times more return on investment than Crosswood. However, Microsoft is 3.68 times less risky than Crosswood. It trades about 0.19 of its potential returns per unit of risk. Crosswood is currently generating about 0.01 per unit of risk. If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Crosswood
Performance |
| Timeline |
| Microsoft |
| Crosswood |
Microsoft and Crosswood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Crosswood
The main advantage of trading using opposite Microsoft and Crosswood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Crosswood 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 Crosswood will offset losses from the drop in Crosswood's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Crosswood vs. Marie Brizard Wine | Crosswood vs. Pullup Entertainment Socit | Crosswood vs. Hotel Majestic Cannes | Crosswood vs. Jacquet Metal Service |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |