Correlation Between Microsoft and Lifeist Wellness
Can any of the company-specific risk be diversified away by investing in both Microsoft and Lifeist Wellness 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 Lifeist Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Lifeist Wellness, you can compare the effects of market volatilities on Microsoft and Lifeist Wellness 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 Lifeist Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Lifeist Wellness.
Diversification Opportunities for Microsoft and Lifeist Wellness
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Lifeist is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Lifeist Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeist Wellness 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 Lifeist Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeist Wellness has no effect on the direction of Microsoft i.e., Microsoft and Lifeist Wellness go up and down completely randomly.
Pair Corralation between Microsoft and Lifeist Wellness
Given the investment horizon of 90 days Microsoft is expected to generate 0.13 times more return on investment than Lifeist Wellness. However, Microsoft is 7.54 times less risky than Lifeist Wellness. It trades about 0.1 of its potential returns per unit of risk. Lifeist Wellness is currently generating about -0.01 per unit of risk. If you would invest 23,313 in Microsoft on September 14, 2024 and sell it today you would earn a total of 21,424 from holding Microsoft or generate 91.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Microsoft vs. Lifeist Wellness
Performance |
| Timeline |
| Microsoft |
| Lifeist Wellness |
Microsoft and Lifeist Wellness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Lifeist Wellness
The main advantage of trading using opposite Microsoft and Lifeist Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Lifeist Wellness 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 Lifeist Wellness will offset losses from the drop in Lifeist Wellness' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Lifeist Wellness vs. Legacy Education | Lifeist Wellness vs. Apple Inc | Lifeist Wellness vs. NVIDIA | Lifeist Wellness vs. Microsoft |
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.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |