Correlation Between Microsoft and Grand Havana
Can any of the company-specific risk be diversified away by investing in both Microsoft and Grand Havana 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 Grand Havana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Grand Havana, you can compare the effects of market volatilities on Microsoft and Grand Havana 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 Grand Havana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Grand Havana.
Diversification Opportunities for Microsoft and Grand Havana
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Grand is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Grand Havana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Havana 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 Grand Havana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Havana has no effect on the direction of Microsoft i.e., Microsoft and Grand Havana go up and down completely randomly.
Pair Corralation between Microsoft and Grand Havana
Given the investment horizon of 90 days Microsoft is expected to generate 0.17 times more return on investment than Grand Havana. However, Microsoft is 5.86 times less risky than Grand Havana. It trades about -0.04 of its potential returns per unit of risk. Grand Havana is currently generating about -0.01 per unit of risk. If you would invest 43,167 in Microsoft on August 31, 2024 and sell it today you would lose (868.00) from holding Microsoft or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Grand Havana
Performance |
| Timeline |
| Microsoft |
| Grand Havana |
Microsoft and Grand Havana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Grand Havana
The main advantage of trading using opposite Microsoft and Grand Havana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Grand Havana 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 Grand Havana will offset losses from the drop in Grand Havana's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Grand Havana vs. Right On Brands | Grand Havana vs. BioAdaptives | Grand Havana vs. Yuenglings Ice Cream | Grand Havana vs. Bit Origin |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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