Correlation Between Microsoft and Matthews China
Can any of the company-specific risk be diversified away by investing in both Microsoft and Matthews China 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 Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Matthews China Dividend, you can compare the effects of market volatilities on Microsoft and Matthews China 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 Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Matthews China.
Diversification Opportunities for Microsoft and Matthews China
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Matthews is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Matthews China Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China Dividend 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 Matthews China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews China Dividend has no effect on the direction of Microsoft i.e., Microsoft and Matthews China go up and down completely randomly.
Pair Corralation between Microsoft and Matthews China
Given the investment horizon of 90 days Microsoft is expected to generate 1.05 times more return on investment than Matthews China. However, Microsoft is 1.05 times more volatile than Matthews China Dividend. It trades about 0.09 of its potential returns per unit of risk. Matthews China Dividend is currently generating about -0.01 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Matthews China Dividend
Performance |
| Timeline |
| Microsoft |
| Matthews China Dividend |
Microsoft and Matthews China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Matthews China
The main advantage of trading using opposite Microsoft and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Matthews China 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 Matthews China will offset losses from the drop in Matthews China's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Matthews China vs. Matthews China Dividend | Matthews China vs. Matthews China Fund | Matthews China vs. Matthews China Small | Matthews China vs. Aquagold International |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |