Correlation Between Microsoft and More Provident
Can any of the company-specific risk be diversified away by investing in both Microsoft and More Provident 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 More Provident into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and More Provident Funds, you can compare the effects of market volatilities on Microsoft and More Provident 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 More Provident. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and More Provident.
Diversification Opportunities for Microsoft and More Provident
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and More is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and More Provident Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on More Provident Funds 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 More Provident. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of More Provident Funds has no effect on the direction of Microsoft i.e., Microsoft and More Provident go up and down completely randomly.
Pair Corralation between Microsoft and More Provident
Given the investment horizon of 90 days Microsoft is expected to generate 0.66 times more return on investment than More Provident. However, Microsoft is 1.51 times less risky than More Provident. It trades about 0.1 of its potential returns per unit of risk. More Provident Funds is currently generating about 0.06 per unit of risk. If you would invest 23,595 in Microsoft on September 20, 2024 and sell it today you would earn a total of 21,851 from holding Microsoft or generate 92.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.78% |
| Values | Daily Returns |
Microsoft vs. More Provident Funds
Performance |
| Timeline |
| Microsoft |
| More Provident Funds |
Microsoft and More Provident Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and More Provident
The main advantage of trading using opposite Microsoft and More Provident positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, More Provident 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 More Provident will offset losses from the drop in More Provident's long position.| Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
| More Provident vs. Clal Insurance Enterprises | More Provident vs. Unicorn Technologies | More Provident vs. IDI Insurance | More Provident vs. Tower Semiconductor |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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