Correlation Between Microsoft and Image Protect
Can any of the company-specific risk be diversified away by investing in both Microsoft and Image Protect 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 Image Protect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Image Protect, you can compare the effects of market volatilities on Microsoft and Image Protect 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 Image Protect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Image Protect.
Diversification Opportunities for Microsoft and Image Protect
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Image is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Image Protect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Image Protect 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 Image Protect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Image Protect has no effect on the direction of Microsoft i.e., Microsoft and Image Protect go up and down completely randomly.
Pair Corralation between Microsoft and Image Protect
Given the investment horizon of 90 days Microsoft is expected to generate 102.27 times less return on investment than Image Protect. But when comparing it to its historical volatility, Microsoft is 49.78 times less risky than Image Protect. It trades about 0.06 of its potential returns per unit of risk. Image Protect is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Image Protect on August 28, 2024 and sell it today you would earn a total of 0.01 from holding Image Protect or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Image Protect
Performance |
| Timeline |
| Microsoft |
| Image Protect |
Microsoft and Image Protect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Image Protect
The main advantage of trading using opposite Microsoft and Image Protect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Image Protect 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 Image Protect will offset losses from the drop in Image Protect's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Image Protect vs. Salesforce | Image Protect vs. SAP SE ADR | Image Protect vs. ServiceNow | Image Protect vs. Intuit Inc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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