Correlation Between Microsoft and Must Capital
Can any of the company-specific risk be diversified away by investing in both Microsoft and Must Capital 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 Must Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Must Capital, you can compare the effects of market volatilities on Microsoft and Must Capital 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 Must Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Must Capital.
Diversification Opportunities for Microsoft and Must Capital
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Must is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Must Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Must Capital 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 Must Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Must Capital has no effect on the direction of Microsoft i.e., Microsoft and Must Capital go up and down completely randomly.
Pair Corralation between Microsoft and Must Capital
Given the investment horizon of 90 days Microsoft is expected to generate 0.38 times more return on investment than Must Capital. However, Microsoft is 2.67 times less risky than Must Capital. It trades about 0.08 of its potential returns per unit of risk. Must Capital is currently generating about -0.04 per unit of risk. If you would invest 24,843 in Microsoft on August 31, 2024 and sell it today you would earn a total of 17,456 from holding Microsoft or generate 70.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Microsoft vs. Must Capital
Performance |
| Timeline |
| Microsoft |
| Must Capital |
Microsoft and Must Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Must Capital
The main advantage of trading using opposite Microsoft and Must Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Must Capital 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 Must Capital will offset losses from the drop in Must Capital's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Must Capital vs. Primaris Retail RE | Must Capital vs. Canso Credit Trust | Must Capital vs. Laurentian Bank | Must Capital vs. Definity Financial Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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