Correlation Between Microsoft and Huntington Bancshares
Can any of the company-specific risk be diversified away by investing in both Microsoft and Huntington Bancshares 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 Huntington Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Huntington Bancshares Incorporated, you can compare the effects of market volatilities on Microsoft and Huntington Bancshares 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 Huntington Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Huntington Bancshares.
Diversification Opportunities for Microsoft and Huntington Bancshares
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Huntington is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Huntington Bancshares Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Bancshares 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 Huntington Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Bancshares has no effect on the direction of Microsoft i.e., Microsoft and Huntington Bancshares go up and down completely randomly.
Pair Corralation between Microsoft and Huntington Bancshares
Given the investment horizon of 90 days Microsoft is expected to generate 0.75 times more return on investment than Huntington Bancshares. However, Microsoft is 1.33 times less risky than Huntington Bancshares. It trades about 0.09 of its potential returns per unit of risk. Huntington Bancshares Incorporated is currently generating about 0.04 per unit of risk. If you would invest 24,341 in Microsoft on August 29, 2024 and sell it today you would earn a total of 18,458 from holding Microsoft or generate 75.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.21% |
| Values | Daily Returns |
Microsoft vs. Huntington Bancshares Incorpor
Performance |
| Timeline |
| Microsoft |
| Huntington Bancshares |
Microsoft and Huntington Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Huntington Bancshares
The main advantage of trading using opposite Microsoft and Huntington Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Huntington Bancshares 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 Huntington Bancshares will offset losses from the drop in Huntington Bancshares' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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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