Correlation Between Microsoft and Guardian Dividend
Can any of the company-specific risk be diversified away by investing in both Microsoft and Guardian Dividend 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 Guardian Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Guardian Dividend Growth, you can compare the effects of market volatilities on Microsoft and Guardian Dividend 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 Guardian Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Guardian Dividend.
Diversification Opportunities for Microsoft and Guardian Dividend
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Guardian is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Guardian Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Dividend Growth 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 Guardian Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Dividend Growth has no effect on the direction of Microsoft i.e., Microsoft and Guardian Dividend go up and down completely randomly.
Pair Corralation between Microsoft and Guardian Dividend
Given the investment horizon of 90 days Microsoft is expected to generate 2.18 times more return on investment than Guardian Dividend. However, Microsoft is 2.18 times more volatile than Guardian Dividend Growth. It trades about 0.15 of its potential returns per unit of risk. Guardian Dividend Growth is currently generating about 0.24 per unit of risk. If you would invest 40,955 in Microsoft on September 2, 2024 and sell it today you would earn a total of 1,391 from holding Microsoft or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Guardian Dividend Growth
Performance |
| Timeline |
| Microsoft |
| Guardian Dividend Growth |
Microsoft and Guardian Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Guardian Dividend
The main advantage of trading using opposite Microsoft and Guardian Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Guardian Dividend 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 Guardian Dividend will offset losses from the drop in Guardian Dividend's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Guardian Dividend vs. Guardian Fundamental Global | Guardian Dividend vs. Fidelity Total Market | Guardian Dividend vs. Pgim Jennison Diversified | Guardian Dividend vs. Russell 2000 2x |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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