Correlation Between Microsoft and Eic Value
Can any of the company-specific risk be diversified away by investing in both Microsoft and Eic Value 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 Eic Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Eic Value Fund, you can compare the effects of market volatilities on Microsoft and Eic Value 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 Eic Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Eic Value.
Diversification Opportunities for Microsoft and Eic Value
Modest diversification
The 3 months correlation between Microsoft and Eic is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Eic Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eic Value Fund 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 Eic Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eic Value Fund has no effect on the direction of Microsoft i.e., Microsoft and Eic Value go up and down completely randomly.
Pair Corralation between Microsoft and Eic Value
Given the investment horizon of 90 days Microsoft is expected to generate 1.1 times less return on investment than Eic Value. In addition to that, Microsoft is 1.91 times more volatile than Eic Value Fund. It trades about 0.05 of its total potential returns per unit of risk. Eic Value Fund is currently generating about 0.12 per unit of volatility. If you would invest 1,539 in Eic Value Fund on September 3, 2024 and sell it today you would earn a total of 303.00 from holding Eic Value Fund or generate 19.69% 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. Eic Value Fund
Performance |
| Timeline |
| Microsoft |
| Eic Value Fund |
Microsoft and Eic Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Eic Value
The main advantage of trading using opposite Microsoft and Eic Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Eic Value 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 Eic Value will offset losses from the drop in Eic Value's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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