Correlation Between Microsoft and Gmo Emerging
Can any of the company-specific risk be diversified away by investing in both Microsoft and Gmo Emerging 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 Gmo Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Gmo Emerging Domestic, you can compare the effects of market volatilities on Microsoft and Gmo Emerging 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 Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Gmo Emerging.
Diversification Opportunities for Microsoft and Gmo Emerging
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Gmo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Gmo Emerging Domestic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Domestic 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 Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Domestic has no effect on the direction of Microsoft i.e., Microsoft and Gmo Emerging go up and down completely randomly.
Pair Corralation between Microsoft and Gmo Emerging
If you would invest 37,145 in Microsoft on September 3, 2024 and sell it today you would earn a total of 5,953 from holding Microsoft or generate 16.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
Microsoft vs. Gmo Emerging Domestic
Performance |
| Timeline |
| Microsoft |
| Gmo Emerging Domestic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Gmo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Gmo Emerging
The main advantage of trading using opposite Microsoft and Gmo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Gmo Emerging 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 Gmo Emerging will offset losses from the drop in Gmo Emerging's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Gmo Emerging vs. Columbia Global Technology | Gmo Emerging vs. Pgim Jennison Technology | Gmo Emerging vs. Red Oak Technology | Gmo Emerging vs. Mfs Technology Fund |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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