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 Value, 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
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and First is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and First Eagle Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Value 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 Value 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 1.51 times more return on investment than First Eagle. However, Microsoft is 1.51 times more volatile than First Eagle Value. It trades about 0.07 of its potential returns per unit of risk. First Eagle Value is currently generating about 0.09 per unit of risk. If you would invest 33,040 in Microsoft on August 29, 2024 and sell it today you would earn a total of 9,259 from holding Microsoft or generate 28.02% 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. First Eagle Value
Performance |
| Timeline |
| Microsoft |
| First Eagle Value |
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. Qs Growth Fund | First Eagle vs. Champlain Mid Cap | First Eagle vs. T Rowe Price | First Eagle vs. Tfa Alphagen Growth |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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