Correlation Between Microsoft and OFS Capital
Can any of the company-specific risk be diversified away by investing in both Microsoft and OFS 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 OFS Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and OFS Capital Corp, you can compare the effects of market volatilities on Microsoft and OFS 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 OFS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and OFS Capital.
Diversification Opportunities for Microsoft and OFS Capital
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and OFS is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and OFS Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Capital Corp 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 OFS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Capital Corp has no effect on the direction of Microsoft i.e., Microsoft and OFS Capital go up and down completely randomly.
Pair Corralation between Microsoft and OFS Capital
Given the investment horizon of 90 days Microsoft is expected to under-perform the OFS Capital. In addition to that, Microsoft is 2.9 times more volatile than OFS Capital Corp. It trades about -0.05 of its total potential returns per unit of risk. OFS Capital Corp is currently generating about 0.0 per unit of volatility. If you would invest 815.00 in OFS Capital Corp on August 27, 2024 and sell it today you would earn a total of 0.00 from holding OFS Capital Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. OFS Capital Corp
Performance |
| Timeline |
| Microsoft |
| OFS Capital Corp |
Microsoft and OFS Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and OFS Capital
The main advantage of trading using opposite Microsoft and OFS Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, OFS 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 OFS Capital will offset losses from the drop in OFS Capital's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| OFS Capital vs. Stellus Capital Investment | OFS Capital vs. Fidus Investment Corp | OFS Capital vs. Monroe Capital Corp | OFS Capital vs. New Mountain Finance |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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