Correlation Between Microsoft and Fidelity Balanced
Can any of the company-specific risk be diversified away by investing in both Microsoft and Fidelity Balanced 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 Fidelity Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Fidelity Balanced Fund, you can compare the effects of market volatilities on Microsoft and Fidelity Balanced 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 Fidelity Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Fidelity Balanced.
Diversification Opportunities for Microsoft and Fidelity Balanced
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Fidelity is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Fidelity Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Balanced 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 Fidelity Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Balanced has no effect on the direction of Microsoft i.e., Microsoft and Fidelity Balanced go up and down completely randomly.
Pair Corralation between Microsoft and Fidelity Balanced
Given the investment horizon of 90 days Microsoft is expected to generate 1.21 times less return on investment than Fidelity Balanced. In addition to that, Microsoft is 2.28 times more volatile than Fidelity Balanced Fund. It trades about 0.06 of its total potential returns per unit of risk. Fidelity Balanced Fund is currently generating about 0.16 per unit of volatility. If you would invest 2,486 in Fidelity Balanced Fund on August 29, 2024 and sell it today you would earn a total of 575.00 from holding Fidelity Balanced Fund or generate 23.13% 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. Fidelity Balanced Fund
Performance |
| Timeline |
| Microsoft |
| Fidelity Balanced |
Microsoft and Fidelity Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Fidelity Balanced
The main advantage of trading using opposite Microsoft and Fidelity Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Fidelity Balanced 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 Fidelity Balanced will offset losses from the drop in Fidelity Balanced's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Fidelity Balanced vs. Fidelity Puritan Fund | Fidelity Balanced vs. Fidelity Low Priced Stock | Fidelity Balanced vs. Fidelity International Discovery | Fidelity Balanced vs. Fidelity Contrafund |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |