Correlation Between Microsoft and Alternative Asset
Can any of the company-specific risk be diversified away by investing in both Microsoft and Alternative Asset 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 Alternative Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Alternative Asset Allocation, you can compare the effects of market volatilities on Microsoft and Alternative Asset 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 Alternative Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Alternative Asset.
Diversification Opportunities for Microsoft and Alternative Asset
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and Alternative is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Alternative Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Asset 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 Alternative Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Asset has no effect on the direction of Microsoft i.e., Microsoft and Alternative Asset go up and down completely randomly.
Pair Corralation between Microsoft and Alternative Asset
Given the investment horizon of 90 days Microsoft is expected to generate 6.33 times more return on investment than Alternative Asset. However, Microsoft is 6.33 times more volatile than Alternative Asset Allocation. It trades about 0.1 of its potential returns per unit of risk. Alternative Asset Allocation is currently generating about 0.11 per unit of risk. If you would invest 23,488 in Microsoft on September 13, 2024 and sell it today you would earn a total of 21,468 from holding Microsoft or generate 91.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Alternative Asset Allocation
Performance |
| Timeline |
| Microsoft |
| Alternative Asset |
Microsoft and Alternative Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Alternative Asset
The main advantage of trading using opposite Microsoft and Alternative Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Alternative Asset 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 Alternative Asset will offset losses from the drop in Alternative Asset's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Alternative Asset vs. Allianzgi Health Sciences | Alternative Asset vs. Deutsche Health And | Alternative Asset vs. Alphacentric Lifesci Healthcare | Alternative Asset vs. Live Oak Health |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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