Correlation Between Microsoft and FlexShares STOXX
Can any of the company-specific risk be diversified away by investing in both Microsoft and FlexShares STOXX 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 FlexShares STOXX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and FlexShares STOXX Global, you can compare the effects of market volatilities on Microsoft and FlexShares STOXX 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 FlexShares STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and FlexShares STOXX.
Diversification Opportunities for Microsoft and FlexShares STOXX
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and FlexShares is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and FlexShares STOXX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares STOXX Global 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 FlexShares STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares STOXX Global has no effect on the direction of Microsoft i.e., Microsoft and FlexShares STOXX go up and down completely randomly.
Pair Corralation between Microsoft and FlexShares STOXX
If you would invest 17,702 in FlexShares STOXX Global on December 1, 2024 and sell it today you would lose (7.00) from holding FlexShares STOXX Global or give up 0.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. FlexShares STOXX Global
Performance |
| Timeline |
| Microsoft |
| FlexShares STOXX Global |
Microsoft and FlexShares STOXX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and FlexShares STOXX
The main advantage of trading using opposite Microsoft and FlexShares STOXX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, FlexShares STOXX 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 FlexShares STOXX will offset losses from the drop in FlexShares STOXX's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| FlexShares STOXX vs. FlexShares Quality Large | FlexShares STOXX vs. FlexShares Disciplined Duration | FlexShares STOXX vs. FlexShares Real Assets | FlexShares STOXX vs. First Trust Developed |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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