Correlation Between Microsoft and Kelly Services
Can any of the company-specific risk be diversified away by investing in both Microsoft and Kelly Services 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 Kelly Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Kelly Services B, you can compare the effects of market volatilities on Microsoft and Kelly Services 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 Kelly Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Kelly Services.
Diversification Opportunities for Microsoft and Kelly Services
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Kelly is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Kelly Services B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelly Services B 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 Kelly Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelly Services B has no effect on the direction of Microsoft i.e., Microsoft and Kelly Services go up and down completely randomly.
Pair Corralation between Microsoft and Kelly Services
Given the investment horizon of 90 days Microsoft is expected to generate 0.42 times more return on investment than Kelly Services. However, Microsoft is 2.39 times less risky than Kelly Services. It trades about -0.04 of its potential returns per unit of risk. Kelly Services B is currently generating about -0.23 per unit of risk. If you would invest 42,574 in Microsoft on August 28, 2024 and sell it today you would lose (695.00) from holding Microsoft or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Kelly Services B
Performance |
| Timeline |
| Microsoft |
| Kelly Services B |
Microsoft and Kelly Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Kelly Services
The main advantage of trading using opposite Microsoft and Kelly Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Kelly Services 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 Kelly Services will offset losses from the drop in Kelly Services' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Kelly Services vs. Heidrick Struggles International | Kelly Services vs. Kforce Inc | Kelly Services vs. Korn Ferry | Kelly Services vs. Kelly Services A |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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