Correlation Between Microsoft and Powerstorm Holdings
Can any of the company-specific risk be diversified away by investing in both Microsoft and Powerstorm Holdings 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 Powerstorm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Powerstorm Holdings, you can compare the effects of market volatilities on Microsoft and Powerstorm Holdings 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 Powerstorm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Powerstorm Holdings.
Diversification Opportunities for Microsoft and Powerstorm Holdings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and Powerstorm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Powerstorm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powerstorm Holdings 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 Powerstorm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powerstorm Holdings has no effect on the direction of Microsoft i.e., Microsoft and Powerstorm Holdings go up and down completely randomly.
Pair Corralation between Microsoft and Powerstorm Holdings
Given the investment horizon of 90 days Microsoft is expected to generate 0.11 times more return on investment than Powerstorm Holdings. However, Microsoft is 8.95 times less risky than Powerstorm Holdings. It trades about 0.19 of its potential returns per unit of risk. Powerstorm Holdings is currently generating about -0.24 per unit of risk. If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Microsoft vs. Powerstorm Holdings
Performance |
| Timeline |
| Microsoft |
| Powerstorm Holdings |
Microsoft and Powerstorm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Powerstorm Holdings
The main advantage of trading using opposite Microsoft and Powerstorm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Powerstorm Holdings 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 Powerstorm Holdings will offset losses from the drop in Powerstorm Holdings' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Powerstorm Holdings vs. Solid Power | Powerstorm Holdings vs. Plug Power | Powerstorm Holdings vs. FREYR Battery SA | Powerstorm Holdings vs. FuelCell Energy |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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