Correlation Between Microsoft and First Bancshares
Can any of the company-specific risk be diversified away by investing in both Microsoft and First Bancshares 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 First Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and First Bancshares, you can compare the effects of market volatilities on Microsoft and First Bancshares 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 First Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and First Bancshares.
Diversification Opportunities for Microsoft and First Bancshares
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and First is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and First Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancshares 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 First Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancshares has no effect on the direction of Microsoft i.e., Microsoft and First Bancshares go up and down completely randomly.
Pair Corralation between Microsoft and First Bancshares
If you would invest 2,275 in First Bancshares on August 28, 2024 and sell it today you would earn a total of 0.00 from holding First Bancshares or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Microsoft vs. First Bancshares
Performance |
| Timeline |
| Microsoft |
| First Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and First Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and First Bancshares
The main advantage of trading using opposite Microsoft and First Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, First Bancshares 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 First Bancshares will offset losses from the drop in First Bancshares' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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