Correlation Between Microsoft and Icon Long/short
Can any of the company-specific risk be diversified away by investing in both Microsoft and Icon Long/short 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 Icon Long/short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Icon Longshort Fund, you can compare the effects of market volatilities on Microsoft and Icon Long/short 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 Icon Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Icon Long/short.
Diversification Opportunities for Microsoft and Icon Long/short
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Icon is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Icon Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Long/short 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 Icon Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Long/short has no effect on the direction of Microsoft i.e., Microsoft and Icon Long/short go up and down completely randomly.
Pair Corralation between Microsoft and Icon Long/short
Given the investment horizon of 90 days Microsoft is expected to generate 6.0 times less return on investment than Icon Long/short. In addition to that, Microsoft is 1.06 times more volatile than Icon Longshort Fund. It trades about 0.01 of its total potential returns per unit of risk. Icon Longshort Fund is currently generating about 0.1 per unit of volatility. If you would invest 2,581 in Icon Longshort Fund on August 28, 2024 and sell it today you would earn a total of 366.00 from holding Icon Longshort Fund or generate 14.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Icon Longshort Fund
Performance |
| Timeline |
| Microsoft |
| Icon Long/short |
Microsoft and Icon Long/short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Icon Long/short
The main advantage of trading using opposite Microsoft and Icon Long/short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Icon Long/short 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 Icon Long/short will offset losses from the drop in Icon Long/short's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Icon Long/short vs. Boston Partners Longshort | Icon Long/short vs. Diamond Hill Long Short | Icon Long/short vs. Jpmorgan Research Market | Icon Long/short vs. Calamos Market Neutral |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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