Correlation Between Microsoft and Voya Floating
Can any of the company-specific risk be diversified away by investing in both Microsoft and Voya Floating 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 Voya Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Voya Floating Rate, you can compare the effects of market volatilities on Microsoft and Voya Floating 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 Voya Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Voya Floating.
Diversification Opportunities for Microsoft and Voya Floating
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Voya is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Voya Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Floating Rate 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 Voya Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Floating Rate has no effect on the direction of Microsoft i.e., Microsoft and Voya Floating go up and down completely randomly.
Pair Corralation between Microsoft and Voya Floating
Given the investment horizon of 90 days Microsoft is expected to generate 5.86 times more return on investment than Voya Floating. However, Microsoft is 5.86 times more volatile than Voya Floating Rate. It trades about 0.09 of its potential returns per unit of risk. Voya Floating Rate is currently generating about 0.17 per unit of risk. If you would invest 31,884 in Microsoft on September 12, 2024 and sell it today you would earn a total of 12,992 from holding Microsoft or generate 40.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Microsoft vs. Voya Floating Rate
Performance |
| Timeline |
| Microsoft |
| Voya Floating Rate |
Microsoft and Voya Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Voya Floating
The main advantage of trading using opposite Microsoft and Voya Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Voya Floating 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 Voya Floating will offset losses from the drop in Voya Floating's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Voya Floating vs. Transamerica Intermediate Muni | Voya Floating vs. Blrc Sgy Mnp | Voya Floating vs. Baird Strategic Municipal | Voya Floating vs. Morningstar Municipal Bond |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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