Correlation Between Microsoft and Predex Funds
Can any of the company-specific risk be diversified away by investing in both Microsoft and Predex Funds 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 Predex Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Predex Funds, you can compare the effects of market volatilities on Microsoft and Predex Funds 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 Predex Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Predex Funds.
Diversification Opportunities for Microsoft and Predex Funds
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and Predex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Predex Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Predex Funds 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 Predex Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Predex Funds has no effect on the direction of Microsoft i.e., Microsoft and Predex Funds go up and down completely randomly.
Pair Corralation between Microsoft and Predex Funds
Given the investment horizon of 90 days Microsoft is expected to generate 10.66 times more return on investment than Predex Funds. However, Microsoft is 10.66 times more volatile than Predex Funds. It trades about 0.07 of its potential returns per unit of risk. Predex Funds is currently generating about -0.17 per unit of risk. If you would invest 37,188 in Microsoft on September 20, 2024 and sell it today you would earn a total of 8,258 from holding Microsoft or generate 22.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Microsoft vs. Predex Funds
Performance |
| Timeline |
| Microsoft |
| Predex Funds |
Microsoft and Predex Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Predex Funds
The main advantage of trading using opposite Microsoft and Predex Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Predex Funds 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 Predex Funds will offset losses from the drop in Predex Funds' long position.| Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
| Predex Funds vs. Ab Global Bond | Predex Funds vs. 361 Global Longshort | Predex Funds vs. Barings Global Floating | Predex Funds vs. Ab Global Risk |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |