Correlation Between Microsoft and Federated High
Can any of the company-specific risk be diversified away by investing in both Microsoft and Federated High 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 Federated High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Federated High Income, you can compare the effects of market volatilities on Microsoft and Federated High 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 Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Federated High.
Diversification Opportunities for Microsoft and Federated High
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Federated is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Federated High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Income 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 Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Income has no effect on the direction of Microsoft i.e., Microsoft and Federated High go up and down completely randomly.
Pair Corralation between Microsoft and Federated High
Given the investment horizon of 90 days Microsoft is expected to generate 3.13 times more return on investment than Federated High. However, Microsoft is 3.13 times more volatile than Federated High Income. It trades about 0.08 of its potential returns per unit of risk. Federated High Income is currently generating about 0.13 per unit of risk. If you would invest 25,277 in Microsoft on September 3, 2024 and sell it today you would earn a total of 17,821 from holding Microsoft or generate 70.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 7.47% |
| Values | Daily Returns |
Microsoft vs. Federated High Income
Performance |
| Timeline |
| Microsoft |
| Federated High Income |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Federated High
The main advantage of trading using opposite Microsoft and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Federated High 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 Federated High will offset losses from the drop in Federated High's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Federated High vs. Federated Hermes Mdt | Federated High vs. Federated Mdt Large | Federated High vs. Federated High Income | Federated High vs. Federated Hermes Conservative |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |