Correlation Between Microsoft and Loomis Sayles
Can any of the company-specific risk be diversified away by investing in both Microsoft and Loomis Sayles 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 Loomis Sayles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Loomis Sayles High, you can compare the effects of market volatilities on Microsoft and Loomis Sayles 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 Loomis Sayles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Loomis Sayles.
Diversification Opportunities for Microsoft and Loomis Sayles
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Loomis is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Loomis Sayles High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles High 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 Loomis Sayles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis Sayles High has no effect on the direction of Microsoft i.e., Microsoft and Loomis Sayles go up and down completely randomly.
Pair Corralation between Microsoft and Loomis Sayles
Given the investment horizon of 90 days Microsoft is expected to generate 4.95 times more return on investment than Loomis Sayles. However, Microsoft is 4.95 times more volatile than Loomis Sayles High. It trades about 0.09 of its potential returns per unit of risk. Loomis Sayles High is currently generating about 0.13 per unit of risk. If you would invest 24,146 in Microsoft on August 30, 2024 and sell it today you would earn a total of 18,153 from holding Microsoft or generate 75.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Loomis Sayles High
Performance |
| Timeline |
| Microsoft |
| Loomis Sayles High |
Microsoft and Loomis Sayles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Loomis Sayles
The main advantage of trading using opposite Microsoft and Loomis Sayles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Loomis Sayles 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 Loomis Sayles will offset losses from the drop in Loomis Sayles' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Loomis Sayles vs. Columbia Global Technology | Loomis Sayles vs. Janus Global Technology | Loomis Sayles vs. Hennessy Technology Fund | Loomis Sayles vs. Dreyfus Technology Growth |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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