Correlation Between Microsoft and Dr Martens
Can any of the company-specific risk be diversified away by investing in both Microsoft and Dr Martens 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 Dr Martens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Dr Martens plc, you can compare the effects of market volatilities on Microsoft and Dr Martens 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 Dr Martens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Dr Martens.
Diversification Opportunities for Microsoft and Dr Martens
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and DOCMF is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Dr Martens plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Martens plc 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 Dr Martens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Martens plc has no effect on the direction of Microsoft i.e., Microsoft and Dr Martens go up and down completely randomly.
Pair Corralation between Microsoft and Dr Martens
Given the investment horizon of 90 days Microsoft is expected to under-perform the Dr Martens. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.14 times less risky than Dr Martens. The stock trades about -0.04 of its potential returns per unit of risk. The Dr Martens plc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 73.00 in Dr Martens plc on August 25, 2024 and sell it today you would lose (1.00) from holding Dr Martens plc or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Dr Martens plc
Performance |
| Timeline |
| Microsoft |
| Dr Martens plc |
Microsoft and Dr Martens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Dr Martens
The main advantage of trading using opposite Microsoft and Dr Martens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Dr Martens 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 Dr Martens will offset losses from the drop in Dr Martens' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Dr Martens vs. American Rebel Holdings | Dr Martens vs. Designer Brands | Dr Martens vs. Renewable Energy and | Dr Martens vs. Crocs Inc |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |