Correlation Between Microsoft and Media Investment
Can any of the company-specific risk be diversified away by investing in both Microsoft and Media Investment 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 Media Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Media Investment Optimization, you can compare the effects of market volatilities on Microsoft and Media Investment 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 Media Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Media Investment.
Diversification Opportunities for Microsoft and Media Investment
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Media is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Media Investment Optimization in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media Investment Opt 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 Media Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media Investment Opt has no effect on the direction of Microsoft i.e., Microsoft and Media Investment go up and down completely randomly.
Pair Corralation between Microsoft and Media Investment
Given the investment horizon of 90 days Microsoft is expected to generate 0.34 times more return on investment than Media Investment. However, Microsoft is 2.95 times less risky than Media Investment. It trades about 0.07 of its potential returns per unit of risk. Media Investment Optimization is currently generating about -0.02 per unit of risk. If you would invest 26,694 in Microsoft on November 4, 2024 and sell it today you would earn a total of 14,812 from holding Microsoft or generate 55.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.21% |
| Values | Daily Returns |
Microsoft vs. Media Investment Optimization
Performance |
| Timeline |
| Microsoft |
| Media Investment Opt |
Microsoft and Media Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Media Investment
The main advantage of trading using opposite Microsoft and Media Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Media Investment 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 Media Investment will offset losses from the drop in Media Investment's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Media Investment vs. Tier1 Technology SA | Media Investment vs. Elaia Investment Spain | Media Investment vs. Arteche Lantegi Elkartea | Media Investment vs. Energy Solar Tech |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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