Correlation Between Microsoft and Dug Technology
Can any of the company-specific risk be diversified away by investing in both Microsoft and Dug Technology 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 Dug Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Dug Technology, you can compare the effects of market volatilities on Microsoft and Dug Technology 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 Dug Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Dug Technology.
Diversification Opportunities for Microsoft and Dug Technology
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Dug is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Dug Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dug Technology 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 Dug Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dug Technology has no effect on the direction of Microsoft i.e., Microsoft and Dug Technology go up and down completely randomly.
Pair Corralation between Microsoft and Dug Technology
Given the investment horizon of 90 days Microsoft is expected to generate 0.42 times more return on investment than Dug Technology. However, Microsoft is 2.36 times less risky than Dug Technology. It trades about -0.04 of its potential returns per unit of risk. Dug Technology is currently generating about -0.1 per unit of risk. If you would invest 43,167 in Microsoft on August 31, 2024 and sell it today you would lose (821.00) from holding Microsoft or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Dug Technology
Performance |
| Timeline |
| Microsoft |
| Dug Technology |
Microsoft and Dug Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Dug Technology
The main advantage of trading using opposite Microsoft and Dug Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Dug Technology 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 Dug Technology will offset losses from the drop in Dug Technology's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Dug Technology vs. Amani Gold | Dug Technology vs. A1 Investments Resources | Dug Technology vs. Coronado Global Resources | Dug Technology vs. Hutchison Telecommunications |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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