Correlation Between Microsoft and Robert Half
Can any of the company-specific risk be diversified away by investing in both Microsoft and Robert Half 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 Robert Half into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Robert Half International, you can compare the effects of market volatilities on Microsoft and Robert Half 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 Robert Half. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Robert Half.
Diversification Opportunities for Microsoft and Robert Half
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Robert is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Robert Half International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robert Half 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 Robert Half. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robert Half International has no effect on the direction of Microsoft i.e., Microsoft and Robert Half go up and down completely randomly.
Pair Corralation between Microsoft and Robert Half
Given the investment horizon of 90 days Microsoft is expected to under-perform the Robert Half. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.58 times less risky than Robert Half. The stock trades about -0.04 of its potential returns per unit of risk. The Robert Half International is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 6,865 in Robert Half International on August 28, 2024 and sell it today you would earn a total of 712.00 from holding Robert Half International or generate 10.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Robert Half International
Performance |
| Timeline |
| Microsoft |
| Robert Half International |
Microsoft and Robert Half Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Robert Half
The main advantage of trading using opposite Microsoft and Robert Half positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Robert Half 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 Robert Half will offset losses from the drop in Robert Half's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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