Correlation Between Microsoft and SPDR Galaxy
Can any of the company-specific risk be diversified away by investing in both Microsoft and SPDR Galaxy 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 SPDR Galaxy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and SPDR Galaxy Hedged, you can compare the effects of market volatilities on Microsoft and SPDR Galaxy 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 SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and SPDR Galaxy.
Diversification Opportunities for Microsoft and SPDR Galaxy
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and SPDR is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and SPDR Galaxy Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy 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 SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Hedged has no effect on the direction of Microsoft i.e., Microsoft and SPDR Galaxy go up and down completely randomly.
Pair Corralation between Microsoft and SPDR Galaxy
Given the investment horizon of 90 days Microsoft is expected to generate 0.26 times more return on investment than SPDR Galaxy. However, Microsoft is 3.91 times less risky than SPDR Galaxy. It trades about 0.51 of its potential returns per unit of risk. SPDR Galaxy Hedged is currently generating about 0.12 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. SPDR Galaxy Hedged
Performance |
| Timeline |
| Microsoft |
| SPDR Galaxy Hedged |
Microsoft and SPDR Galaxy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and SPDR Galaxy
The main advantage of trading using opposite Microsoft and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, SPDR Galaxy 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 SPDR Galaxy will offset losses from the drop in SPDR Galaxy's long position.| Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
| SPDR Galaxy vs. Freedom Day Dividend | SPDR Galaxy vs. Franklin Templeton ETF | SPDR Galaxy vs. iShares MSCI China | SPDR Galaxy vs. Tidal Trust II |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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