Correlation Between Microsoft and IShares Currency
Can any of the company-specific risk be diversified away by investing in both Microsoft and IShares Currency 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 IShares Currency into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and iShares Currency Hedged, you can compare the effects of market volatilities on Microsoft and IShares Currency 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 IShares Currency. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and IShares Currency.
Diversification Opportunities for Microsoft and IShares Currency
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and IShares is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and iShares Currency Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Currency Hedged 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 IShares Currency. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Currency Hedged has no effect on the direction of Microsoft i.e., Microsoft and IShares Currency go up and down completely randomly.
Pair Corralation between Microsoft and IShares Currency
Given the investment horizon of 90 days Microsoft is expected to generate 1.26 times less return on investment than IShares Currency. In addition to that, Microsoft is 1.82 times more volatile than iShares Currency Hedged. It trades about 0.04 of its total potential returns per unit of risk. iShares Currency Hedged is currently generating about 0.1 per unit of volatility. If you would invest 2,783 in iShares Currency Hedged on August 27, 2024 and sell it today you would earn a total of 493.00 from holding iShares Currency Hedged or generate 17.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. iShares Currency Hedged
Performance |
| Timeline |
| Microsoft |
| iShares Currency Hedged |
Microsoft and IShares Currency Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and IShares Currency
The main advantage of trading using opposite Microsoft and IShares Currency positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, IShares Currency 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 IShares Currency will offset losses from the drop in IShares Currency's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
| IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares MSCI Intl | IShares Currency vs. iShares Currency Hedged |
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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