Correlation Between Microsoft and MoneyHero Limited
Can any of the company-specific risk be diversified away by investing in both Microsoft and MoneyHero Limited 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 MoneyHero Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and MoneyHero Limited Warrants, you can compare the effects of market volatilities on Microsoft and MoneyHero Limited 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 MoneyHero Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and MoneyHero Limited.
Diversification Opportunities for Microsoft and MoneyHero Limited
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and MoneyHero is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and MoneyHero Limited Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MoneyHero Limited 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 MoneyHero Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MoneyHero Limited has no effect on the direction of Microsoft i.e., Microsoft and MoneyHero Limited go up and down completely randomly.
Pair Corralation between Microsoft and MoneyHero Limited
Given the investment horizon of 90 days Microsoft is expected to generate 100.06 times less return on investment than MoneyHero Limited. But when comparing it to its historical volatility, Microsoft is 12.93 times less risky than MoneyHero Limited. It trades about 0.01 of its potential returns per unit of risk. MoneyHero Limited Warrants is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7.30 in MoneyHero Limited Warrants on September 3, 2024 and sell it today you would lose (2.30) from holding MoneyHero Limited Warrants or give up 31.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. MoneyHero Limited Warrants
Performance |
| Timeline |
| Microsoft |
| MoneyHero Limited |
Microsoft and MoneyHero Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and MoneyHero Limited
The main advantage of trading using opposite Microsoft and MoneyHero Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, MoneyHero Limited 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 MoneyHero Limited will offset losses from the drop in MoneyHero Limited's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| MoneyHero Limited vs. Alphabet Inc Class A | MoneyHero Limited vs. Twilio Inc | MoneyHero Limited vs. Snap Inc | MoneyHero Limited vs. Baidu Inc |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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