Correlation Between Microsoft and KWESST Micro
Can any of the company-specific risk be diversified away by investing in both Microsoft and KWESST Micro 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 KWESST Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and KWESST Micro Systems, you can compare the effects of market volatilities on Microsoft and KWESST Micro 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 KWESST Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and KWESST Micro.
Diversification Opportunities for Microsoft and KWESST Micro
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and KWESST is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and KWESST Micro Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KWESST Micro Systems 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 KWESST Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KWESST Micro Systems has no effect on the direction of Microsoft i.e., Microsoft and KWESST Micro go up and down completely randomly.
Pair Corralation between Microsoft and KWESST Micro
Given the investment horizon of 90 days Microsoft is expected to generate 0.14 times more return on investment than KWESST Micro. However, Microsoft is 7.13 times less risky than KWESST Micro. It trades about 0.09 of its potential returns per unit of risk. KWESST Micro Systems is currently generating about -0.03 per unit of risk. If you would invest 24,146 in Microsoft on August 30, 2024 and sell it today you would earn a total of 18,153 from holding Microsoft or generate 75.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. KWESST Micro Systems
Performance |
| Timeline |
| Microsoft |
| KWESST Micro Systems |
Microsoft and KWESST Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and KWESST Micro
The main advantage of trading using opposite Microsoft and KWESST Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, KWESST Micro 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 KWESST Micro will offset losses from the drop in KWESST Micro's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| KWESST Micro vs. Ducommun Incorporated | KWESST Micro vs. Park Electrochemical | KWESST Micro vs. National Presto Industries | KWESST Micro vs. Woodward |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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