Correlation Between Microsoft and Guinness Atkinson
Can any of the company-specific risk be diversified away by investing in both Microsoft and Guinness Atkinson 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 Guinness Atkinson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Guinness Atkinson Asset, you can compare the effects of market volatilities on Microsoft and Guinness Atkinson 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 Guinness Atkinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Guinness Atkinson.
Diversification Opportunities for Microsoft and Guinness Atkinson
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Guinness is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Guinness Atkinson Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson Asset 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 Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson Asset has no effect on the direction of Microsoft i.e., Microsoft and Guinness Atkinson go up and down completely randomly.
Pair Corralation between Microsoft and Guinness Atkinson
Given the investment horizon of 90 days Microsoft is expected to generate 1.02 times more return on investment than Guinness Atkinson. However, Microsoft is 1.02 times more volatile than Guinness Atkinson Asset. It trades about 0.07 of its potential returns per unit of risk. Guinness Atkinson Asset is currently generating about 0.01 per unit of risk. If you would invest 37,049 in Microsoft on September 14, 2024 and sell it today you would earn a total of 7,688 from holding Microsoft or generate 20.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.76% |
| Values | Daily Returns |
Microsoft vs. Guinness Atkinson Asset
Performance |
| Timeline |
| Microsoft |
| Guinness Atkinson Asset |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Microsoft and Guinness Atkinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Guinness Atkinson
The main advantage of trading using opposite Microsoft and Guinness Atkinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Guinness Atkinson 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 Guinness Atkinson will offset losses from the drop in Guinness Atkinson's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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