Correlation Between Microsoft and Mast Global
Can any of the company-specific risk be diversified away by investing in both Microsoft and Mast Global 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 Mast Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Mast Global Battery, you can compare the effects of market volatilities on Microsoft and Mast Global 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 Mast Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Mast Global.
Diversification Opportunities for Microsoft and Mast Global
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Mast is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Mast Global Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mast Global Battery 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 Mast Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mast Global Battery has no effect on the direction of Microsoft i.e., Microsoft and Mast Global go up and down completely randomly.
Pair Corralation between Microsoft and Mast Global
Given the investment horizon of 90 days Microsoft is expected to under-perform the Mast Global. In addition to that, Microsoft is 1.17 times more volatile than Mast Global Battery. It trades about -0.04 of its total potential returns per unit of risk. Mast Global Battery is currently generating about -0.03 per unit of volatility. If you would invest 2,540 in Mast Global Battery on August 31, 2024 and sell it today you would lose (34.00) from holding Mast Global Battery or give up 1.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Mast Global Battery
Performance |
| Timeline |
| Microsoft |
| Mast Global Battery |
Microsoft and Mast Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Mast Global
The main advantage of trading using opposite Microsoft and Mast Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Mast Global 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 Mast Global will offset losses from the drop in Mast Global'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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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