Correlation Between Microsoft and Invesco EQQQ
Can any of the company-specific risk be diversified away by investing in both Microsoft and Invesco EQQQ 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 Invesco EQQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Invesco EQQQ NASDAQ 100, you can compare the effects of market volatilities on Microsoft and Invesco EQQQ 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 Invesco EQQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Invesco EQQQ.
Diversification Opportunities for Microsoft and Invesco EQQQ
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Invesco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Invesco EQQQ NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco EQQQ NASDAQ 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 Invesco EQQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco EQQQ NASDAQ has no effect on the direction of Microsoft i.e., Microsoft and Invesco EQQQ go up and down completely randomly.
Pair Corralation between Microsoft and Invesco EQQQ
Given the investment horizon of 90 days Microsoft is expected to generate 1.29 times more return on investment than Invesco EQQQ. However, Microsoft is 1.29 times more volatile than Invesco EQQQ NASDAQ 100. It trades about 0.1 of its potential returns per unit of risk. Invesco EQQQ NASDAQ 100 is currently generating about 0.12 per unit of risk. If you would invest 22,345 in Microsoft on August 31, 2024 and sell it today you would earn a total of 20,001 from holding Microsoft or generate 89.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Microsoft vs. Invesco EQQQ NASDAQ 100
Performance |
| Timeline |
| Microsoft |
| Invesco EQQQ NASDAQ |
Microsoft and Invesco EQQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Invesco EQQQ
The main advantage of trading using opposite Microsoft and Invesco EQQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Invesco EQQQ 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 Invesco EQQQ will offset losses from the drop in Invesco EQQQ's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |