Correlation Between Microsoft and LAMF Global
Can any of the company-specific risk be diversified away by investing in both Microsoft and LAMF Global 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 LAMF Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and LAMF Global Ventures, you can compare the effects of market volatilities on Microsoft and LAMF Global 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 LAMF Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and LAMF Global.
Diversification Opportunities for Microsoft and LAMF Global
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and LAMF is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and LAMF Global Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAMF Global Ventures 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 LAMF Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAMF Global Ventures has no effect on the direction of Microsoft i.e., Microsoft and LAMF Global go up and down completely randomly.
Pair Corralation between Microsoft and LAMF Global
Given the investment horizon of 90 days Microsoft is expected to generate 2.06 times more return on investment than LAMF Global. However, Microsoft is 2.06 times more volatile than LAMF Global Ventures. It trades about 0.08 of its potential returns per unit of risk. LAMF Global Ventures is currently generating about 0.01 per unit of risk. If you would invest 25,277 in Microsoft on September 3, 2024 and sell it today you would earn a total of 17,069 from holding Microsoft or generate 67.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 30.71% |
| Values | Daily Returns |
Microsoft vs. LAMF Global Ventures
Performance |
| Timeline |
| Microsoft |
| LAMF Global Ventures |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and LAMF Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and LAMF Global
The main advantage of trading using opposite Microsoft and LAMF Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, LAMF Global 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 LAMF Global will offset losses from the drop in LAMF Global's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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