Correlation Between Microsoft and HCM Acquisition
Can any of the company-specific risk be diversified away by investing in both Microsoft and HCM Acquisition 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 HCM Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HCM Acquisition Corp, you can compare the effects of market volatilities on Microsoft and HCM Acquisition 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 HCM Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HCM Acquisition.
Diversification Opportunities for Microsoft and HCM Acquisition
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and HCM is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HCM Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCM Acquisition Corp 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 HCM Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCM Acquisition Corp has no effect on the direction of Microsoft i.e., Microsoft and HCM Acquisition go up and down completely randomly.
Pair Corralation between Microsoft and HCM Acquisition
If you would invest 39,365 in Microsoft on November 3, 2024 and sell it today you would earn a total of 2,141 from holding Microsoft or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.8% |
| Values | Daily Returns |
Microsoft vs. HCM Acquisition Corp
Performance |
| Timeline |
| Microsoft |
| HCM Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and HCM Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and HCM Acquisition
The main advantage of trading using opposite Microsoft and HCM Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, HCM Acquisition 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 HCM Acquisition will offset losses from the drop in HCM Acquisition's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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