Correlation Between Microsoft and Inrad Optics
Can any of the company-specific risk be diversified away by investing in both Microsoft and Inrad Optics 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 Inrad Optics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Inrad Optics, you can compare the effects of market volatilities on Microsoft and Inrad Optics 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 Inrad Optics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Inrad Optics.
Diversification Opportunities for Microsoft and Inrad Optics
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Inrad is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Inrad Optics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inrad Optics 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 Inrad Optics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inrad Optics has no effect on the direction of Microsoft i.e., Microsoft and Inrad Optics go up and down completely randomly.
Pair Corralation between Microsoft and Inrad Optics
Given the investment horizon of 90 days Microsoft is expected to generate 0.28 times more return on investment than Inrad Optics. However, Microsoft is 3.52 times less risky than Inrad Optics. It trades about 0.08 of its potential returns per unit of risk. Inrad Optics is currently generating about 0.0 per unit of risk. If you would invest 24,116 in Microsoft on August 27, 2024 and sell it today you would earn a total of 17,584 from holding Microsoft or generate 72.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.44% |
| Values | Daily Returns |
Microsoft vs. Inrad Optics
Performance |
| Timeline |
| Microsoft |
| Inrad Optics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Inrad Optics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Inrad Optics
The main advantage of trading using opposite Microsoft and Inrad Optics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Inrad Optics 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 Inrad Optics will offset losses from the drop in Inrad Optics' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
| Inrad Optics vs. M tron Industries | Inrad Optics vs. Ieh Corp | Inrad Optics vs. Micropac Industries | Inrad Optics vs. Deswell Industries |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |