Correlation Between Microsoft and Pimco International
Can any of the company-specific risk be diversified away by investing in both Microsoft and Pimco International 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 Pimco International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Pimco International Stocksplus, you can compare the effects of market volatilities on Microsoft and Pimco International 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 Pimco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Pimco International.
Diversification Opportunities for Microsoft and Pimco International
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Pimco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Pimco International Stocksplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco International 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 Pimco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco International has no effect on the direction of Microsoft i.e., Microsoft and Pimco International go up and down completely randomly.
Pair Corralation between Microsoft and Pimco International
Given the investment horizon of 90 days Microsoft is expected to generate 2.62 times more return on investment than Pimco International. However, Microsoft is 2.62 times more volatile than Pimco International Stocksplus. It trades about -0.01 of its potential returns per unit of risk. Pimco International Stocksplus is currently generating about -0.07 per unit of risk. If you would invest 42,944 in Microsoft on August 29, 2024 and sell it today you would lose (558.00) from holding Microsoft or give up 1.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Pimco International Stocksplus
Performance |
| Timeline |
| Microsoft |
| Pimco International |
Microsoft and Pimco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Pimco International
The main advantage of trading using opposite Microsoft and Pimco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Pimco International 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 Pimco International will offset losses from the drop in Pimco International's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Pimco International vs. Pimco Small Cap | Pimco International vs. Fundamental Indexplus Tr | Pimco International vs. Stocksplus Total Return | Pimco International vs. Allianzgi Nfj Mid Cap |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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