Correlation Between Microsoft and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Microsoft and Grocery Outlet 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 Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Grocery Outlet Holding, you can compare the effects of market volatilities on Microsoft and Grocery Outlet 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 Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Grocery Outlet.
Diversification Opportunities for Microsoft and Grocery Outlet
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Grocery is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Microsoft i.e., Microsoft and Grocery Outlet go up and down completely randomly.
Pair Corralation between Microsoft and Grocery Outlet
Given the investment horizon of 90 days Microsoft is expected to under-perform the Grocery Outlet. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 3.08 times less risky than Grocery Outlet. The stock trades about 0.0 of its potential returns per unit of risk. The Grocery Outlet Holding is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,684 in Grocery Outlet Holding on August 29, 2024 and sell it today you would earn a total of 442.00 from holding Grocery Outlet Holding or generate 26.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Grocery Outlet Holding
Performance |
| Timeline |
| Microsoft |
| Grocery Outlet Holding |
Microsoft and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Grocery Outlet
The main advantage of trading using opposite Microsoft and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Grocery Outlet vs. Village Super Market | Grocery Outlet vs. Sprouts Farmers Market | Grocery Outlet vs. Albertsons Companies | Grocery Outlet vs. Dingdong ADR |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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