Correlation Between Microsoft and Ingles Markets
Can any of the company-specific risk be diversified away by investing in both Microsoft and Ingles Markets 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 Ingles Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Ingles Markets Incorporated, you can compare the effects of market volatilities on Microsoft and Ingles Markets 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 Ingles Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Ingles Markets.
Diversification Opportunities for Microsoft and Ingles Markets
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Ingles is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Ingles Markets Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingles Markets 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 Ingles Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingles Markets has no effect on the direction of Microsoft i.e., Microsoft and Ingles Markets go up and down completely randomly.
Pair Corralation between Microsoft and Ingles Markets
Given the investment horizon of 90 days Microsoft is expected to generate 0.84 times more return on investment than Ingles Markets. However, Microsoft is 1.19 times less risky than Ingles Markets. It trades about 0.03 of its potential returns per unit of risk. Ingles Markets Incorporated is currently generating about -0.05 per unit of risk. If you would invest 38,737 in Microsoft on November 9, 2024 and sell it today you would earn a total of 2,845 from holding Microsoft or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Ingles Markets Incorporated
Performance |
| Timeline |
| Microsoft |
| Ingles Markets |
Microsoft and Ingles Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Ingles Markets
The main advantage of trading using opposite Microsoft and Ingles Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Ingles Markets 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 Ingles Markets will offset losses from the drop in Ingles Markets' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Ingles Markets vs. Weis Markets | Ingles Markets vs. Natural Grocers by | Ingles Markets vs. Grocery Outlet Holding | Ingles Markets vs. Village Super Market |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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