Correlation Between Microsoft and Lakeland Bancorp
Can any of the company-specific risk be diversified away by investing in both Microsoft and Lakeland Bancorp 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 Lakeland Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Lakeland Bancorp, you can compare the effects of market volatilities on Microsoft and Lakeland Bancorp 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 Lakeland Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Lakeland Bancorp.
Diversification Opportunities for Microsoft and Lakeland Bancorp
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Lakeland is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Lakeland Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Bancorp 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 Lakeland Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Bancorp has no effect on the direction of Microsoft i.e., Microsoft and Lakeland Bancorp go up and down completely randomly.
Pair Corralation between Microsoft and Lakeland Bancorp
If you would invest 1,551 in Lakeland Bancorp on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Lakeland Bancorp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Microsoft vs. Lakeland Bancorp
Performance |
| Timeline |
| Microsoft |
| Lakeland Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Lakeland Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Lakeland Bancorp
The main advantage of trading using opposite Microsoft and Lakeland Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Lakeland Bancorp 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 Lakeland Bancorp will offset losses from the drop in Lakeland Bancorp's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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