Correlation Between Microsoft and Merchants Bancorp
Can any of the company-specific risk be diversified away by investing in both Microsoft and Merchants Bancorp 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 Merchants Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Merchants Bancorp PR, you can compare the effects of market volatilities on Microsoft and Merchants Bancorp 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 Merchants Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Merchants Bancorp.
Diversification Opportunities for Microsoft and Merchants Bancorp
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and Merchants is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Merchants Bancorp PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Bancorp 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 Merchants Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Bancorp has no effect on the direction of Microsoft i.e., Microsoft and Merchants Bancorp go up and down completely randomly.
Pair Corralation between Microsoft and Merchants Bancorp
If you would invest (100.00) in Merchants Bancorp PR on December 11, 2024 and sell it today you would earn a total of 100.00 from holding Merchants Bancorp PR or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Microsoft vs. Merchants Bancorp PR
Performance |
| Timeline |
| Microsoft |
| Merchants Bancorp |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Microsoft and Merchants Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Merchants Bancorp
The main advantage of trading using opposite Microsoft and Merchants Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Merchants Bancorp 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 Merchants Bancorp will offset losses from the drop in Merchants Bancorp's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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