Correlation Between Microsoft and Green Star
Can any of the company-specific risk be diversified away by investing in both Microsoft and Green Star 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 Green Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Green Star Products, you can compare the effects of market volatilities on Microsoft and Green Star 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 Green Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Green Star.
Diversification Opportunities for Microsoft and Green Star
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Green is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Green Star Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Star Products 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 Green Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Star Products has no effect on the direction of Microsoft i.e., Microsoft and Green Star go up and down completely randomly.
Pair Corralation between Microsoft and Green Star
Given the investment horizon of 90 days Microsoft is expected to generate 0.12 times more return on investment than Green Star. However, Microsoft is 8.26 times less risky than Green Star. It trades about -0.06 of its potential returns per unit of risk. Green Star Products is currently generating about -0.08 per unit of risk. If you would invest 42,729 in Microsoft on August 26, 2024 and sell it today you would lose (1,029) from holding Microsoft or give up 2.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Green Star Products
Performance |
| Timeline |
| Microsoft |
| Green Star Products |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Microsoft and Green Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Green Star
The main advantage of trading using opposite Microsoft and Green Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Green Star 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 Green Star will offset losses from the drop in Green Star's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
| Green Star vs. Iofina plc | Green Star vs. Greystone Logistics | Green Star vs. Crown Electrokinetics Corp | Green Star vs. Orica Ltd 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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