Correlation Between Microsoft and Equitable
Can any of the company-specific risk be diversified away by investing in both Microsoft and Equitable 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 Equitable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Equitable Group, you can compare the effects of market volatilities on Microsoft and Equitable 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 Equitable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Equitable.
Diversification Opportunities for Microsoft and Equitable
Very good diversification
The 3 months correlation between Microsoft and Equitable is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Equitable Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Group 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 Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Group has no effect on the direction of Microsoft i.e., Microsoft and Equitable go up and down completely randomly.
Pair Corralation between Microsoft and Equitable
Given the investment horizon of 90 days Microsoft is expected to under-perform the Equitable. In addition to that, Microsoft is 1.34 times more volatile than Equitable Group. It trades about -0.04 of its total potential returns per unit of risk. Equitable Group is currently generating about 0.02 per unit of volatility. If you would invest 10,607 in Equitable Group on November 8, 2024 and sell it today you would earn a total of 52.00 from holding Equitable Group or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Equitable Group
Performance |
| Timeline |
| Microsoft |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Equitable Group |
Microsoft and Equitable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Equitable
The main advantage of trading using opposite Microsoft and Equitable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Equitable 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 Equitable will offset losses from the drop in Equitable's long position.| Microsoft vs. Crowdstrike Holdings | Microsoft vs. Okta Inc | Microsoft vs. Cloudflare | Microsoft vs. MongoDB |
| Equitable vs. goeasy | Equitable vs. Canadian Western Bank | Equitable vs. TFI International | Equitable vs. Intact Financial |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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