Correlation Between Microsoft and First Eagle
Can any of the company-specific risk be diversified away by investing in both Microsoft and First Eagle 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 Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and First Eagle Small, you can compare the effects of market volatilities on Microsoft and First Eagle 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 Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and First Eagle.
Diversification Opportunities for Microsoft and First Eagle
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and First is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and First Eagle Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Small 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 Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Small has no effect on the direction of Microsoft i.e., Microsoft and First Eagle go up and down completely randomly.
Pair Corralation between Microsoft and First Eagle
Given the investment horizon of 90 days Microsoft is expected to generate 2.15 times less return on investment than First Eagle. But when comparing it to its historical volatility, Microsoft is 1.24 times less risky than First Eagle. It trades about 0.19 of its potential returns per unit of risk. First Eagle Small is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,039 in First Eagle Small on September 1, 2024 and sell it today you would earn a total of 107.00 from holding First Eagle Small or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. First Eagle Small
Performance |
| Timeline |
| Microsoft |
| First Eagle Small |
Microsoft and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and First Eagle
The main advantage of trading using opposite Microsoft and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, First Eagle 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 Eagle will offset losses from the drop in First Eagle's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| First Eagle vs. First Eagle Global | First Eagle vs. First Eagle Global | First Eagle vs. First Eagle Global | First Eagle vs. First Eagle Fund |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |