Correlation Between Microsoft and L Catterton
Can any of the company-specific risk be diversified away by investing in both Microsoft and L Catterton 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 L Catterton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and L Catterton Asia, you can compare the effects of market volatilities on Microsoft and L Catterton 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 L Catterton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and L Catterton.
Diversification Opportunities for Microsoft and L Catterton
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and LCAAW is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and L Catterton Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Catterton Asia 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 L Catterton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Catterton Asia has no effect on the direction of Microsoft i.e., Microsoft and L Catterton go up and down completely randomly.
Pair Corralation between Microsoft and L Catterton
If you would invest 49.00 in L Catterton Asia on August 26, 2024 and sell it today you would earn a total of 0.00 from holding L Catterton Asia 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. L Catterton Asia
Performance |
| Timeline |
| Microsoft |
| L Catterton Asia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and L Catterton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and L Catterton
The main advantage of trading using opposite Microsoft and L Catterton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, L Catterton 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 L Catterton will offset losses from the drop in L Catterton's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |