Correlation Between Microsoft and Hamilton Enhanced
Can any of the company-specific risk be diversified away by investing in both Microsoft and Hamilton Enhanced 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 Hamilton Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Hamilton Enhanced Utilities, you can compare the effects of market volatilities on Microsoft and Hamilton Enhanced 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 Hamilton Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Hamilton Enhanced.
Diversification Opportunities for Microsoft and Hamilton Enhanced
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Hamilton is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Hamilton Enhanced Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Enhanced 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 Hamilton Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Enhanced has no effect on the direction of Microsoft i.e., Microsoft and Hamilton Enhanced go up and down completely randomly.
Pair Corralation between Microsoft and Hamilton Enhanced
Given the investment horizon of 90 days Microsoft is expected to generate 2.09 times more return on investment than Hamilton Enhanced. However, Microsoft is 2.09 times more volatile than Hamilton Enhanced Utilities. It trades about 0.19 of its potential returns per unit of risk. Hamilton Enhanced Utilities is currently generating about 0.12 per unit of risk. If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Microsoft vs. Hamilton Enhanced Utilities
Performance |
| Timeline |
| Microsoft |
| Hamilton Enhanced |
Microsoft and Hamilton Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Hamilton Enhanced
The main advantage of trading using opposite Microsoft and Hamilton Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Hamilton Enhanced 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 Hamilton Enhanced will offset losses from the drop in Hamilton Enhanced's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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