Correlation Between Microsoft and PING
Can any of the company-specific risk be diversified away by investing in both Microsoft and PING 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 PING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and PING, you can compare the effects of market volatilities on Microsoft and PING 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 PING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and PING.
Diversification Opportunities for Microsoft and PING
Very good diversification
The 3 months correlation between Microsoft and PING is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and PING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PING 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 PING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PING has no effect on the direction of Microsoft i.e., Microsoft and PING go up and down completely randomly.
Pair Corralation between Microsoft and PING
Given the investment horizon of 90 days Microsoft is expected to generate 3.1 times less return on investment than PING. But when comparing it to its historical volatility, Microsoft is 2.04 times less risky than PING. It trades about 0.09 of its potential returns per unit of risk. PING is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3.29 in PING on August 30, 2024 and sell it today you would earn a total of 2.43 from holding PING or generate 73.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 32.73% |
| Values | Daily Returns |
Microsoft vs. PING
Performance |
| Timeline |
| Microsoft |
| PING |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and PING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and PING
The main advantage of trading using opposite Microsoft and PING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, PING 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 PING will offset losses from the drop in PING's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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