Correlation Between Microsoft and Amundi ETF
Can any of the company-specific risk be diversified away by investing in both Microsoft and Amundi ETF 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 Amundi ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Amundi ETF PEA, you can compare the effects of market volatilities on Microsoft and Amundi ETF 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 Amundi ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Amundi ETF.
Diversification Opportunities for Microsoft and Amundi ETF
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Amundi is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Amundi ETF PEA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi ETF PEA 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 Amundi ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi ETF PEA has no effect on the direction of Microsoft i.e., Microsoft and Amundi ETF go up and down completely randomly.
Pair Corralation between Microsoft and Amundi ETF
Given the investment horizon of 90 days Microsoft is expected to generate 6.89 times less return on investment than Amundi ETF. In addition to that, Microsoft is 1.5 times more volatile than Amundi ETF PEA. It trades about 0.02 of its total potential returns per unit of risk. Amundi ETF PEA is currently generating about 0.23 per unit of volatility. If you would invest 4,446 in Amundi ETF PEA on August 28, 2024 and sell it today you would earn a total of 263.00 from holding Amundi ETF PEA or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Amundi ETF PEA
Performance |
| Timeline |
| Microsoft |
| Amundi ETF PEA |
Microsoft and Amundi ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Amundi ETF
The main advantage of trading using opposite Microsoft and Amundi ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Amundi ETF 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 Amundi ETF will offset losses from the drop in Amundi ETF's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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