Correlation Between Microsoft and FT Vest
Can any of the company-specific risk be diversified away by investing in both Microsoft and FT Vest 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 FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and FT Vest Dow, you can compare the effects of market volatilities on Microsoft and FT Vest 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 FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and FT Vest.
Diversification Opportunities for Microsoft and FT Vest
Poor diversification
The 3 months correlation between Microsoft and FDND is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and FT Vest Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Dow 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 FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Dow has no effect on the direction of Microsoft i.e., Microsoft and FT Vest go up and down completely randomly.
Pair Corralation between Microsoft and FT Vest
Given the investment horizon of 90 days Microsoft is expected to under-perform the FT Vest. In addition to that, Microsoft is 2.04 times more volatile than FT Vest Dow. It trades about -0.01 of its total potential returns per unit of risk. FT Vest Dow is currently generating about 0.33 per unit of volatility. If you would invest 2,216 in FT Vest Dow on November 2, 2024 and sell it today you would earn a total of 147.00 from holding FT Vest Dow or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. FT Vest Dow
Performance |
| Timeline |
| Microsoft |
| FT Vest Dow |
Microsoft and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and FT Vest
The main advantage of trading using opposite Microsoft and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Zscaler |
| FT Vest vs. Global X Dow | FT Vest vs. AdvisorShares STAR Global | FT Vest vs. Global X Funds | FT Vest vs. Natixis ETF Trust |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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