Correlation Between Microsoft and Healthcare Trust
Can any of the company-specific risk be diversified away by investing in both Microsoft and Healthcare Trust 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 Healthcare Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Healthcare Trust PR, you can compare the effects of market volatilities on Microsoft and Healthcare Trust 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 Healthcare Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Healthcare Trust.
Diversification Opportunities for Microsoft and Healthcare Trust
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Healthcare is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Healthcare Trust PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Trust 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 Healthcare Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Trust has no effect on the direction of Microsoft i.e., Microsoft and Healthcare Trust go up and down completely randomly.
Pair Corralation between Microsoft and Healthcare Trust
Given the investment horizon of 90 days Microsoft is expected to generate 1.86 times more return on investment than Healthcare Trust. However, Microsoft is 1.86 times more volatile than Healthcare Trust PR. It trades about -0.04 of its potential returns per unit of risk. Healthcare Trust PR is currently generating about -0.18 per unit of risk. If you would invest 42,574 in Microsoft on August 28, 2024 and sell it today you would lose (695.00) from holding Microsoft or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Healthcare Trust PR
Performance |
| Timeline |
| Microsoft |
| Healthcare Trust |
Microsoft and Healthcare Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Healthcare Trust
The main advantage of trading using opposite Microsoft and Healthcare Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Healthcare Trust 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 Healthcare Trust will offset losses from the drop in Healthcare Trust's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Healthcare Trust vs. Gladstone Commercial Corp | Healthcare Trust vs. Medalist Diversified Reit | Healthcare Trust vs. Heartland Financial USA | Healthcare Trust vs. Sotherly Hotels PR |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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