Correlation Between Microsoft and Mainstay Common
Can any of the company-specific risk be diversified away by investing in both Microsoft and Mainstay Common 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 Mainstay Common into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Mainstay Mon Stock, you can compare the effects of market volatilities on Microsoft and Mainstay Common 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 Mainstay Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Mainstay Common.
Diversification Opportunities for Microsoft and Mainstay Common
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Mainstay is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Mainstay Mon Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Mon Stock 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 Mainstay Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Mon Stock has no effect on the direction of Microsoft i.e., Microsoft and Mainstay Common go up and down completely randomly.
Pair Corralation between Microsoft and Mainstay Common
Given the investment horizon of 90 days Microsoft is expected to generate 1.75 times more return on investment than Mainstay Common. However, Microsoft is 1.75 times more volatile than Mainstay Mon Stock. It trades about 0.08 of its potential returns per unit of risk. Mainstay Mon Stock is currently generating about 0.09 per unit of risk. If you would invest 24,843 in Microsoft on September 2, 2024 and sell it today you would earn a total of 17,503 from holding Microsoft or generate 70.45% 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. Mainstay Mon Stock
Performance |
| Timeline |
| Microsoft |
| Mainstay Mon Stock |
Microsoft and Mainstay Common Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Mainstay Common
The main advantage of trading using opposite Microsoft and Mainstay Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Mainstay Common 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 Mainstay Common will offset losses from the drop in Mainstay Common's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Mainstay Common vs. Mainstay High Yield | Mainstay Common vs. Mainstay Tax Free | Mainstay Common vs. Mainstay Income Builder | Mainstay Common vs. Mainstay Large Cap |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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