Correlation Between Microsoft and Global X
Can any of the company-specific risk be diversified away by investing in both Microsoft and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Global X Funds, you can compare the effects of market volatilities on Microsoft and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Global X.
Diversification Opportunities for Microsoft and Global X
Modest diversification
The 3 months correlation between Microsoft and Global is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Microsoft i.e., Microsoft and Global X go up and down completely randomly.
Pair Corralation between Microsoft and Global X
Given the investment horizon of 90 days Microsoft is expected to generate 211.24 times less return on investment than Global X. But when comparing it to its historical volatility, Microsoft is 107.46 times less risky than Global X. It trades about 0.07 of its potential returns per unit of risk. Global X Funds is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Global X Funds on August 26, 2024 and sell it today you would earn a total of 4,614 from holding Global X Funds or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 16.82% |
| Values | Daily Returns |
Microsoft vs. Global X Funds
Performance |
| Timeline |
| Microsoft |
| Global X Funds |
Microsoft and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Global X
The main advantage of trading using opposite Microsoft and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Global X vs. Global X Funds | Global X vs. US Treasury 12 | Global X vs. Tidal Trust II | Global X vs. Franklin Liberty Treasury |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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