Correlation Between Microsoft and Franklin North
Can any of the company-specific risk be diversified away by investing in both Microsoft and Franklin North 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 Franklin North into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Franklin North Carolina, you can compare the effects of market volatilities on Microsoft and Franklin North 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 Franklin North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Franklin North.
Diversification Opportunities for Microsoft and Franklin North
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Franklin is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Franklin North Carolina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin North Carolina 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 Franklin North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin North Carolina has no effect on the direction of Microsoft i.e., Microsoft and Franklin North go up and down completely randomly.
Pair Corralation between Microsoft and Franklin North
Given the investment horizon of 90 days Microsoft is expected to under-perform the Franklin North. In addition to that, Microsoft is 4.89 times more volatile than Franklin North Carolina. It trades about -0.04 of its total potential returns per unit of risk. Franklin North Carolina is currently generating about 0.16 per unit of volatility. If you would invest 1,043 in Franklin North Carolina on August 25, 2024 and sell it today you would earn a total of 13.00 from holding Franklin North Carolina or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Franklin North Carolina
Performance |
| Timeline |
| Microsoft |
| Franklin North Carolina |
Microsoft and Franklin North Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Franklin North
The main advantage of trading using opposite Microsoft and Franklin North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Franklin North 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 Franklin North will offset losses from the drop in Franklin North's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Franklin North vs. Franklin Mutual Beacon | Franklin North vs. Templeton Developing Markets | Franklin North vs. Franklin Mutual Global | Franklin North vs. Franklin Mutual Global |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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