Correlation Between Microsoft and VanEck Long
Can any of the company-specific risk be diversified away by investing in both Microsoft and VanEck Long 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 VanEck Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and VanEck Long Muni, you can compare the effects of market volatilities on Microsoft and VanEck Long 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 VanEck Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and VanEck Long.
Diversification Opportunities for Microsoft and VanEck Long
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and VanEck is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and VanEck Long Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Long Muni 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 VanEck Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Long Muni has no effect on the direction of Microsoft i.e., Microsoft and VanEck Long go up and down completely randomly.
Pair Corralation between Microsoft and VanEck Long
Given the investment horizon of 90 days Microsoft is expected to generate 3.1 times more return on investment than VanEck Long. However, Microsoft is 3.1 times more volatile than VanEck Long Muni. It trades about 0.04 of its potential returns per unit of risk. VanEck Long Muni is currently generating about 0.0 per unit of risk. If you would invest 42,511 in Microsoft on October 26, 2024 and sell it today you would earn a total of 2,086 from holding Microsoft or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Microsoft vs. VanEck Long Muni
Performance |
| Timeline |
| Microsoft |
| VanEck Long Muni |
Microsoft and VanEck Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and VanEck Long
The main advantage of trading using opposite Microsoft and VanEck Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, VanEck Long 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 VanEck Long will offset losses from the drop in VanEck Long's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| VanEck Long vs. VanEck Intermediate Muni | VanEck Long vs. VanEck Short Muni | VanEck Long vs. Invesco National AMT Free | VanEck Long vs. SPDR Nuveen Bloomberg |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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