Correlation Between Microsoft and Fidelity New
Can any of the company-specific risk be diversified away by investing in both Microsoft and Fidelity New 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 New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Fidelity New Markets, you can compare the effects of market volatilities on Microsoft and Fidelity New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Fidelity New.
Diversification Opportunities for Microsoft and Fidelity New
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Fidelity is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Fidelity New Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity New Markets 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity New Markets has no effect on the direction of Microsoft i.e., Microsoft and Fidelity New go up and down completely randomly.
Pair Corralation between Microsoft and Fidelity New
Given the investment horizon of 90 days Microsoft is expected to under-perform the Fidelity New. In addition to that, Microsoft is 3.78 times more volatile than Fidelity New Markets. It trades about -0.1 of its total potential returns per unit of risk. Fidelity New Markets is currently generating about -0.19 per unit of volatility. If you would invest 1,288 in Fidelity New Markets on January 21, 2025 and sell it today you would lose (36.00) from holding Fidelity New Markets or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Microsoft vs. Fidelity New Markets
Performance |
| Timeline |
| Microsoft |
| Fidelity New Markets |
Microsoft and Fidelity New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Fidelity New
The main advantage of trading using opposite Microsoft and Fidelity New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Fidelity New 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 New will offset losses from the drop in Fidelity New's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Fidelity New vs. Columbia Global Technology | Fidelity New vs. Nationwide Bailard Technology | Fidelity New vs. Putnam Global Technology | Fidelity New vs. Global Technology Portfolio |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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