Correlation Between Microsoft and Fidelity Sustainability
Can any of the company-specific risk be diversified away by investing in both Microsoft and Fidelity Sustainability 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 Sustainability into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Fidelity Sustainability Bond, you can compare the effects of market volatilities on Microsoft and Fidelity Sustainability 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 Sustainability. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Fidelity Sustainability.
Diversification Opportunities for Microsoft and Fidelity Sustainability
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Fidelity is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Fidelity Sustainability Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sustainability 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 Sustainability. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sustainability has no effect on the direction of Microsoft i.e., Microsoft and Fidelity Sustainability go up and down completely randomly.
Pair Corralation between Microsoft and Fidelity Sustainability
Given the investment horizon of 90 days Microsoft is expected to generate 4.23 times more return on investment than Fidelity Sustainability. However, Microsoft is 4.23 times more volatile than Fidelity Sustainability Bond. It trades about -0.04 of its potential returns per unit of risk. Fidelity Sustainability Bond is currently generating about -0.23 per unit of risk. If you would invest 42,831 in Microsoft on August 25, 2024 and sell it today you would lose (1,131) from holding Microsoft or give up 2.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Fidelity Sustainability Bond
Performance |
| Timeline |
| Microsoft |
| Fidelity Sustainability |
Microsoft and Fidelity Sustainability Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Fidelity Sustainability
The main advantage of trading using opposite Microsoft and Fidelity Sustainability positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Fidelity Sustainability 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 Sustainability will offset losses from the drop in Fidelity Sustainability's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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