Correlation Between Microsoft and Project Energy
Can any of the company-specific risk be diversified away by investing in both Microsoft and Project Energy 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 Project Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Project Energy Reimagined, you can compare the effects of market volatilities on Microsoft and Project Energy 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 Project Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Project Energy.
Diversification Opportunities for Microsoft and Project Energy
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and Project is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Project Energy Reimagined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Project Energy Reimagined 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 Project Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Project Energy Reimagined has no effect on the direction of Microsoft i.e., Microsoft and Project Energy go up and down completely randomly.
Pair Corralation between Microsoft and Project Energy
Given the investment horizon of 90 days Microsoft is expected to generate 0.16 times more return on investment than Project Energy. However, Microsoft is 6.39 times less risky than Project Energy. It trades about 0.06 of its potential returns per unit of risk. Project Energy Reimagined is currently generating about -0.07 per unit of risk. If you would invest 34,287 in Microsoft on September 12, 2024 and sell it today you would earn a total of 10,046 from holding Microsoft or generate 29.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
Microsoft vs. Project Energy Reimagined
Performance |
| Timeline |
| Microsoft |
| Project Energy Reimagined |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Project Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Project Energy
The main advantage of trading using opposite Microsoft and Project Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Project Energy 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 Project Energy will offset losses from the drop in Project Energy's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Project Energy vs. Swiftmerge Acquisition Corp | Project Energy vs. Four Leaf Acquisition | Project Energy vs. IX Acquisition Corp | Project Energy vs. LatAmGrowth SPAC |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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