Correlation Between Microsoft and Global Clean
Can any of the company-specific risk be diversified away by investing in both Microsoft and Global Clean 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 Global Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Global Clean Energy, you can compare the effects of market volatilities on Microsoft and Global Clean 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 Global Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Global Clean.
Diversification Opportunities for Microsoft and Global Clean
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Global is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Global Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Clean Energy 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 Global Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Clean Energy has no effect on the direction of Microsoft i.e., Microsoft and Global Clean go up and down completely randomly.
Pair Corralation between Microsoft and Global Clean
Given the investment horizon of 90 days Microsoft is expected to generate 0.22 times more return on investment than Global Clean. However, Microsoft is 4.63 times less risky than Global Clean. It trades about 0.06 of its potential returns per unit of risk. Global Clean Energy is currently generating about -0.42 per unit of risk. If you would invest 43,811 in Microsoft on October 26, 2024 and sell it today you would earn a total of 595.00 from holding Microsoft or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Global Clean Energy
Performance |
| Timeline |
| Microsoft |
| Global Clean Energy |
Microsoft and Global Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Global Clean
The main advantage of trading using opposite Microsoft and Global Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Global Clean 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 Global Clean will offset losses from the drop in Global Clean's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Global Clean vs. Edible Garden AG | Global Clean vs. Golden Agri Resources | Global Clean vs. Local Bounti Corp | Global Clean vs. Village Farms International |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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