Correlation Between Microsoft and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Microsoft and IShares ESG 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 IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and iShares ESG Aggregate, you can compare the effects of market volatilities on Microsoft and IShares ESG 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 IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and IShares ESG.
Diversification Opportunities for Microsoft and IShares ESG
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and IShares is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and iShares ESG Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aggregate 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 IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Aggregate has no effect on the direction of Microsoft i.e., Microsoft and IShares ESG go up and down completely randomly.
Pair Corralation between Microsoft and IShares ESG
Given the investment horizon of 90 days Microsoft is expected to generate 4.37 times more return on investment than IShares ESG. However, Microsoft is 4.37 times more volatile than iShares ESG Aggregate. It trades about 0.12 of its potential returns per unit of risk. iShares ESG Aggregate is currently generating about -0.08 per unit of risk. If you would invest 41,879 in Microsoft on October 26, 2024 and sell it today you would earn a total of 2,519 from holding Microsoft or generate 6.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. iShares ESG Aggregate
Performance |
| Timeline |
| Microsoft |
| iShares ESG Aggregate |
Microsoft and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and IShares ESG
The main advantage of trading using opposite Microsoft and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, IShares ESG 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 IShares ESG will offset losses from the drop in IShares ESG's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| IShares ESG vs. iShares ESG 1 5 | IShares ESG vs. iShares ESG USD | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |