Correlation Between Microsoft and The Gabelli
Can any of the company-specific risk be diversified away by investing in both Microsoft and The Gabelli 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 The Gabelli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and The Gabelli Utilities, you can compare the effects of market volatilities on Microsoft and The Gabelli 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 The Gabelli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and The Gabelli.
Diversification Opportunities for Microsoft and The Gabelli
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and The is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and The Gabelli Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utilities 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 The Gabelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utilities has no effect on the direction of Microsoft i.e., Microsoft and The Gabelli go up and down completely randomly.
Pair Corralation between Microsoft and The Gabelli
Given the investment horizon of 90 days Microsoft is expected to generate 1.57 times more return on investment than The Gabelli. However, Microsoft is 1.57 times more volatile than The Gabelli Utilities. It trades about 0.09 of its potential returns per unit of risk. The Gabelli Utilities is currently generating about 0.01 per unit of risk. If you would invest 23,466 in Microsoft on September 3, 2024 and sell it today you would earn a total of 18,880 from holding Microsoft or generate 80.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. The Gabelli Utilities
Performance |
| Timeline |
| Microsoft |
| Gabelli Utilities |
Microsoft and The Gabelli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and The Gabelli
The main advantage of trading using opposite Microsoft and The Gabelli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, The Gabelli 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 The Gabelli will offset losses from the drop in The Gabelli's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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