Correlation Between Microsoft and NeoPhotonics
Can any of the company-specific risk be diversified away by investing in both Microsoft and NeoPhotonics 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 NeoPhotonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and NeoPhotonics, you can compare the effects of market volatilities on Microsoft and NeoPhotonics 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 NeoPhotonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and NeoPhotonics.
Diversification Opportunities for Microsoft and NeoPhotonics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and NeoPhotonics is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and NeoPhotonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeoPhotonics 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 NeoPhotonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeoPhotonics has no effect on the direction of Microsoft i.e., Microsoft and NeoPhotonics go up and down completely randomly.
Pair Corralation between Microsoft and NeoPhotonics
If you would invest (100.00) in NeoPhotonics on August 27, 2024 and sell it today you would earn a total of 100.00 from holding NeoPhotonics or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Microsoft vs. NeoPhotonics
Performance |
| Timeline |
| Microsoft |
| NeoPhotonics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and NeoPhotonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and NeoPhotonics
The main advantage of trading using opposite Microsoft and NeoPhotonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, NeoPhotonics 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 NeoPhotonics will offset losses from the drop in NeoPhotonics' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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