Correlation Between Microsoft and Joby Aviation
Can any of the company-specific risk be diversified away by investing in both Microsoft and Joby Aviation 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 Joby Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Joby Aviation, you can compare the effects of market volatilities on Microsoft and Joby Aviation 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 Joby Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Joby Aviation.
Diversification Opportunities for Microsoft and Joby Aviation
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Joby is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Joby Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joby Aviation 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 Joby Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joby Aviation has no effect on the direction of Microsoft i.e., Microsoft and Joby Aviation go up and down completely randomly.
Pair Corralation between Microsoft and Joby Aviation
Given the investment horizon of 90 days Microsoft is expected to under-perform the Joby Aviation. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 8.31 times less risky than Joby Aviation. The stock trades about -0.04 of its potential returns per unit of risk. The Joby Aviation is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 84.00 in Joby Aviation on August 28, 2024 and sell it today you would earn a total of 114.00 from holding Joby Aviation or generate 135.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Joby Aviation
Performance |
| Timeline |
| Microsoft |
| Joby Aviation |
Microsoft and Joby Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Joby Aviation
The main advantage of trading using opposite Microsoft and Joby Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Joby Aviation 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 Joby Aviation will offset losses from the drop in Joby Aviation's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Transaction History View history of all your transactions and understand their impact on performance |