Correlation Between Microsoft and Global Hard
Can any of the company-specific risk be diversified away by investing in both Microsoft and Global Hard 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 Hard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Global Hard Assets, you can compare the effects of market volatilities on Microsoft and Global Hard 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 Hard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Global Hard.
Diversification Opportunities for Microsoft and Global Hard
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Global is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Global Hard Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Hard Assets 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 Hard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Hard Assets has no effect on the direction of Microsoft i.e., Microsoft and Global Hard go up and down completely randomly.
Pair Corralation between Microsoft and Global Hard
Given the investment horizon of 90 days Microsoft is expected to generate 0.99 times more return on investment than Global Hard. However, Microsoft is 1.01 times less risky than Global Hard. It trades about 0.51 of its potential returns per unit of risk. Global Hard Assets is currently generating about -0.26 per unit of risk. If you would invest 41,493 in Microsoft on September 18, 2024 and sell it today you would earn a total of 3,953 from holding Microsoft or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Global Hard Assets
Performance |
| Timeline |
| Microsoft |
| Global Hard Assets |
Microsoft and Global Hard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Global Hard
The main advantage of trading using opposite Microsoft and Global Hard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Global Hard 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 Hard will offset losses from the drop in Global Hard's long position.| Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
| Global Hard vs. Unconstrained Emerging Markets | Global Hard vs. Unconstrained Emerging Markets | Global Hard vs. Unconstrained Emerging Markets | Global Hard vs. Emerging Markets 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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