Correlation Between Microsoft and James Alpha
Can any of the company-specific risk be diversified away by investing in both Microsoft and James Alpha 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 James Alpha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and James Alpha Global, you can compare the effects of market volatilities on Microsoft and James Alpha 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 James Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and James Alpha.
Diversification Opportunities for Microsoft and James Alpha
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and James is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and James Alpha Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Alpha Global 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 James Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Alpha Global has no effect on the direction of Microsoft i.e., Microsoft and James Alpha go up and down completely randomly.
Pair Corralation between Microsoft and James Alpha
Given the investment horizon of 90 days Microsoft is expected to under-perform the James Alpha. In addition to that, Microsoft is 2.13 times more volatile than James Alpha Global. It trades about -0.04 of its total potential returns per unit of risk. James Alpha Global is currently generating about -0.03 per unit of volatility. If you would invest 1,423 in James Alpha Global on August 30, 2024 and sell it today you would lose (10.00) from holding James Alpha Global or give up 0.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. James Alpha Global
Performance |
| Timeline |
| Microsoft |
| James Alpha Global |
Microsoft and James Alpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and James Alpha
The main advantage of trading using opposite Microsoft and James Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, James Alpha 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 James Alpha will offset losses from the drop in James Alpha's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| James Alpha vs. James Alpha Global | James Alpha vs. James Alpha Global | James Alpha vs. Virtus Global Real | James Alpha vs. Virtus Global Real |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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