Correlation Between Microsoft and Smart REIT
Can any of the company-specific risk be diversified away by investing in both Microsoft and Smart REIT 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 Smart REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Smart REIT, you can compare the effects of market volatilities on Microsoft and Smart REIT 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 Smart REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Smart REIT.
Diversification Opportunities for Microsoft and Smart REIT
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Smart is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Smart REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart REIT 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 Smart REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart REIT has no effect on the direction of Microsoft i.e., Microsoft and Smart REIT go up and down completely randomly.
Pair Corralation between Microsoft and Smart REIT
Given the investment horizon of 90 days Microsoft is expected to generate 1.17 times less return on investment than Smart REIT. But when comparing it to its historical volatility, Microsoft is 1.52 times less risky than Smart REIT. It trades about 0.03 of its potential returns per unit of risk. Smart REIT is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,756 in Smart REIT on August 28, 2024 and sell it today you would earn a total of 89.00 from holding Smart REIT or generate 5.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.61% |
| Values | Daily Returns |
Microsoft vs. Smart REIT
Performance |
| Timeline |
| Microsoft |
| Smart REIT |
Microsoft and Smart REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Smart REIT
The main advantage of trading using opposite Microsoft and Smart REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Smart REIT 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 Smart REIT will offset losses from the drop in Smart REIT's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Smart REIT vs. Firm Capital Property | Smart REIT vs. CT Real Estate | Smart REIT vs. Slate Grocery REIT | Smart REIT vs. Phillips Edison Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |