Correlation Between Microsoft and Great-west Mfs
Can any of the company-specific risk be diversified away by investing in both Microsoft and Great-west Mfs 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 Great-west Mfs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Great West Mfs International, you can compare the effects of market volatilities on Microsoft and Great-west Mfs 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 Great-west Mfs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Great-west Mfs.
Diversification Opportunities for Microsoft and Great-west Mfs
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Great-west is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Great West Mfs International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Mfs 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 Great-west Mfs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Mfs has no effect on the direction of Microsoft i.e., Microsoft and Great-west Mfs go up and down completely randomly.
Pair Corralation between Microsoft and Great-west Mfs
Given the investment horizon of 90 days Microsoft is expected to generate 1.54 times more return on investment than Great-west Mfs. However, Microsoft is 1.54 times more volatile than Great West Mfs International. It trades about 0.15 of its potential returns per unit of risk. Great West Mfs International is currently generating about -0.03 per unit of risk. If you would invest 40,955 in Microsoft on September 2, 2024 and sell it today you would earn a total of 1,391 from holding Microsoft or generate 3.4% 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. Great West Mfs International
Performance |
| Timeline |
| Microsoft |
| Great West Mfs |
Microsoft and Great-west Mfs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Great-west Mfs
The main advantage of trading using opposite Microsoft and Great-west Mfs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Great-west Mfs 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 Great-west Mfs will offset losses from the drop in Great-west Mfs' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Great-west Mfs vs. Great West Securefoundation Balanced | Great-west Mfs vs. Great West Lifetime 2020 | Great-west Mfs vs. Great West Lifetime 2020 | Great-west Mfs vs. Great West Lifetime 2020 |
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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