Correlation Between Microsoft and Meridian Equity
Can any of the company-specific risk be diversified away by investing in both Microsoft and Meridian Equity 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 Meridian Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Meridian Equity Income, you can compare the effects of market volatilities on Microsoft and Meridian Equity 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 Meridian Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Meridian Equity.
Diversification Opportunities for Microsoft and Meridian Equity
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Meridian is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Meridian Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Equity Income 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 Meridian Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Equity Income has no effect on the direction of Microsoft i.e., Microsoft and Meridian Equity go up and down completely randomly.
Pair Corralation between Microsoft and Meridian Equity
Given the investment horizon of 90 days Microsoft is expected to generate 2.01 times more return on investment than Meridian Equity. However, Microsoft is 2.01 times more volatile than Meridian Equity Income. It trades about 0.09 of its potential returns per unit of risk. Meridian Equity Income is currently generating about 0.06 per unit of risk. If you would invest 24,146 in Microsoft on August 30, 2024 and sell it today you would earn a total of 18,153 from holding Microsoft or generate 75.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Meridian Equity Income
Performance |
| Timeline |
| Microsoft |
| Meridian Equity Income |
Microsoft and Meridian Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Meridian Equity
The main advantage of trading using opposite Microsoft and Meridian Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Meridian Equity 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 Meridian Equity will offset losses from the drop in Meridian Equity's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Meridian Equity vs. Ab Impact Municipal | Meridian Equity vs. Artisan High Income | Meridian Equity vs. Blrc Sgy Mnp | Meridian Equity vs. Oklahoma Municipal Fund |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |