Correlation Between Microsoft and Voya Retirement
Can any of the company-specific risk be diversified away by investing in both Microsoft and Voya Retirement 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 Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Voya Retirement Growth, you can compare the effects of market volatilities on Microsoft and Voya Retirement 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 Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Voya Retirement.
Diversification Opportunities for Microsoft and Voya Retirement
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Voya is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Voya Retirement Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Retirement Growth 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 Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Retirement Growth has no effect on the direction of Microsoft i.e., Microsoft and Voya Retirement go up and down completely randomly.
Pair Corralation between Microsoft and Voya Retirement
Given the investment horizon of 90 days Microsoft is expected to generate 2.08 times more return on investment than Voya Retirement. However, Microsoft is 2.08 times more volatile than Voya Retirement Growth. It trades about 0.09 of its potential returns per unit of risk. Voya Retirement Growth is currently generating about 0.12 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Voya Retirement Growth
Performance |
| Timeline |
| Microsoft |
| Voya Retirement Growth |
Microsoft and Voya Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Voya Retirement
The main advantage of trading using opposite Microsoft and Voya Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Voya Retirement 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 Retirement will offset losses from the drop in Voya Retirement's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Voya Retirement vs. Qs Large Cap | Voya Retirement vs. Dana Large Cap | Voya Retirement vs. Pace Large Value | Voya Retirement vs. Americafirst Large Cap |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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