Correlation Between Microsoft and Fidelity Canada
Can any of the company-specific risk be diversified away by investing in both Microsoft and Fidelity Canada 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 Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Fidelity Canada Fund, you can compare the effects of market volatilities on Microsoft and Fidelity Canada 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 Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Fidelity Canada.
Diversification Opportunities for Microsoft and Fidelity Canada
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Fidelity is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Fidelity Canada Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canada 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 Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Canada has no effect on the direction of Microsoft i.e., Microsoft and Fidelity Canada go up and down completely randomly.
Pair Corralation between Microsoft and Fidelity Canada
Given the investment horizon of 90 days Microsoft is expected to generate 1.33 times less return on investment than Fidelity Canada. In addition to that, Microsoft is 1.55 times more volatile than Fidelity Canada Fund. It trades about 0.05 of its total potential returns per unit of risk. Fidelity Canada Fund is currently generating about 0.11 per unit of volatility. If you would invest 6,111 in Fidelity Canada Fund on September 2, 2024 and sell it today you would earn a total of 1,378 from holding Fidelity Canada Fund or generate 22.55% 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. Fidelity Canada Fund
Performance |
| Timeline |
| Microsoft |
| Fidelity Canada |
Microsoft and Fidelity Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Fidelity Canada
The main advantage of trading using opposite Microsoft and Fidelity Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Fidelity Canada 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 Canada will offset losses from the drop in Fidelity Canada's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Fidelity Canada vs. Dimensional Retirement Income | Fidelity Canada vs. Franklin Lifesmart Retirement | Fidelity Canada vs. Calvert Moderate Allocation | Fidelity Canada vs. Transamerica Cleartrack Retirement |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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