Correlation Between Microsoft and FingerMotion
Can any of the company-specific risk be diversified away by investing in both Microsoft and FingerMotion 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 FingerMotion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and FingerMotion, you can compare the effects of market volatilities on Microsoft and FingerMotion 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 FingerMotion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and FingerMotion.
Diversification Opportunities for Microsoft and FingerMotion
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and FingerMotion is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and FingerMotion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FingerMotion 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 FingerMotion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FingerMotion has no effect on the direction of Microsoft i.e., Microsoft and FingerMotion go up and down completely randomly.
Pair Corralation between Microsoft and FingerMotion
Given the investment horizon of 90 days Microsoft is expected to under-perform the FingerMotion. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 4.23 times less risky than FingerMotion. The stock trades about -0.07 of its potential returns per unit of risk. The FingerMotion is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 112.00 in FingerMotion on October 23, 2024 and sell it today you would earn a total of 4.00 from holding FingerMotion or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. FingerMotion
Performance |
| Timeline |
| Microsoft |
| FingerMotion |
Microsoft and FingerMotion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and FingerMotion
The main advantage of trading using opposite Microsoft and FingerMotion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, FingerMotion 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 FingerMotion will offset losses from the drop in FingerMotion's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
| FingerMotion vs. Liberty Broadband Srs | FingerMotion vs. KT Corporation | FingerMotion vs. Liberty Broadband Srs | FingerMotion vs. KORE Group Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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