Correlation Between Microsoft and 21Shares Polygon
Can any of the company-specific risk be diversified away by investing in both Microsoft and 21Shares Polygon 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 21Shares Polygon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and 21Shares Polygon ETP, you can compare the effects of market volatilities on Microsoft and 21Shares Polygon 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 21Shares Polygon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and 21Shares Polygon.
Diversification Opportunities for Microsoft and 21Shares Polygon
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and 21Shares is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and 21Shares Polygon ETP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Polygon ETP 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 21Shares Polygon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Polygon ETP has no effect on the direction of Microsoft i.e., Microsoft and 21Shares Polygon go up and down completely randomly.
Pair Corralation between Microsoft and 21Shares Polygon
Given the investment horizon of 90 days Microsoft is expected to generate 0.31 times more return on investment than 21Shares Polygon. However, Microsoft is 3.19 times less risky than 21Shares Polygon. It trades about -0.06 of its potential returns per unit of risk. 21Shares Polygon ETP is currently generating about -0.14 per unit of risk. If you would invest 42,785 in Microsoft on November 5, 2024 and sell it today you would lose (1,279) from holding Microsoft or give up 2.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Microsoft vs. 21Shares Polygon ETP
Performance |
| Timeline |
| Microsoft |
| 21Shares Polygon ETP |
Microsoft and 21Shares Polygon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and 21Shares Polygon
The main advantage of trading using opposite Microsoft and 21Shares Polygon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, 21Shares Polygon 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 21Shares Polygon will offset losses from the drop in 21Shares Polygon's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| 21Shares Polygon vs. 21Shares Ethereum Core | 21Shares Polygon vs. 21Shares Tezos staking | 21Shares Polygon vs. 21Shares Bitcoin ETP | 21Shares Polygon vs. 21Shares Bytetree BOLD |
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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