Correlation Between Microsoft and Evolve Active
Can any of the company-specific risk be diversified away by investing in both Microsoft and Evolve Active 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 Evolve Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Evolve Active Core, you can compare the effects of market volatilities on Microsoft and Evolve Active 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 Evolve Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Evolve Active.
Diversification Opportunities for Microsoft and Evolve Active
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Evolve is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Evolve Active Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Active Core 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 Evolve Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Active Core has no effect on the direction of Microsoft i.e., Microsoft and Evolve Active go up and down completely randomly.
Pair Corralation between Microsoft and Evolve Active
Given the investment horizon of 90 days Microsoft is expected to under-perform the Evolve Active. In addition to that, Microsoft is 6.94 times more volatile than Evolve Active Core. It trades about -0.04 of its total potential returns per unit of risk. Evolve Active Core is currently generating about 0.14 per unit of volatility. If you would invest 1,793 in Evolve Active Core on August 28, 2024 and sell it today you would earn a total of 13.00 from holding Evolve Active Core or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Evolve Active Core
Performance |
| Timeline |
| Microsoft |
| Evolve Active Core |
Microsoft and Evolve Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Evolve Active
The main advantage of trading using opposite Microsoft and Evolve Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Evolve Active 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 Evolve Active will offset losses from the drop in Evolve Active's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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