Correlation Between Microsoft and IGM Biosciences
Can any of the company-specific risk be diversified away by investing in both Microsoft and IGM Biosciences 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 IGM Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and IGM Biosciences, you can compare the effects of market volatilities on Microsoft and IGM Biosciences 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 IGM Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and IGM Biosciences.
Diversification Opportunities for Microsoft and IGM Biosciences
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and IGM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and IGM Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Biosciences 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 IGM Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGM Biosciences has no effect on the direction of Microsoft i.e., Microsoft and IGM Biosciences go up and down completely randomly.
Pair Corralation between Microsoft and IGM Biosciences
Given the investment horizon of 90 days Microsoft is expected to generate 0.32 times more return on investment than IGM Biosciences. However, Microsoft is 3.1 times less risky than IGM Biosciences. It trades about -0.04 of its potential returns per unit of risk. IGM Biosciences is currently generating about -0.43 per unit of risk. If you would invest 43,167 in Microsoft on August 31, 2024 and sell it today you would lose (821.00) from holding Microsoft or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. IGM Biosciences
Performance |
| Timeline |
| Microsoft |
| IGM Biosciences |
Microsoft and IGM Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and IGM Biosciences
The main advantage of trading using opposite Microsoft and IGM Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, IGM Biosciences 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 IGM Biosciences will offset losses from the drop in IGM Biosciences' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| IGM Biosciences vs. Avidity Biosciences | IGM Biosciences vs. Cullinan Oncology LLC | IGM Biosciences vs. Mineralys Therapeutics, Common | IGM Biosciences vs. Monte Rosa Therapeutics |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |