Correlation Between Microsoft and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both Microsoft and Kinetics Small 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 Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Kinetics Small Cap, you can compare the effects of market volatilities on Microsoft and Kinetics Small 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 Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Kinetics Small.
Diversification Opportunities for Microsoft and Kinetics Small
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Kinetics is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap 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 Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Microsoft i.e., Microsoft and Kinetics Small go up and down completely randomly.
Pair Corralation between Microsoft and Kinetics Small
Given the investment horizon of 90 days Microsoft is expected to generate 0.97 times more return on investment than Kinetics Small. However, Microsoft is 1.03 times less risky than Kinetics Small. It trades about 0.09 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.08 per unit of risk. If you would invest 24,341 in Microsoft on August 29, 2024 and sell it today you would earn a total of 18,458 from holding Microsoft or generate 75.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Kinetics Small Cap
Performance |
| Timeline |
| Microsoft |
| Kinetics Small Cap |
Microsoft and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Kinetics Small
The main advantage of trading using opposite Microsoft and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Kinetics Small 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 Kinetics Small will offset losses from the drop in Kinetics Small's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Kinetics Small vs. Oil Gas Ultrasector | Kinetics Small vs. Clearbridge Energy Mlp | Kinetics Small vs. Dreyfus Natural Resources | Kinetics Small vs. Franklin Natural Resources |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| 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 | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |