Correlation Between Microsoft and Strategic Asset
Can any of the company-specific risk be diversified away by investing in both Microsoft and Strategic Asset 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 Strategic Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Strategic Asset Management, you can compare the effects of market volatilities on Microsoft and Strategic Asset 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 Strategic Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Strategic Asset.
Diversification Opportunities for Microsoft and Strategic Asset
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Strategic is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Strategic Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Asset Mana 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 Strategic Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Asset Mana has no effect on the direction of Microsoft i.e., Microsoft and Strategic Asset go up and down completely randomly.
Pair Corralation between Microsoft and Strategic Asset
Given the investment horizon of 90 days Microsoft is expected to generate 2.54 times more return on investment than Strategic Asset. However, Microsoft is 2.54 times more volatile than Strategic Asset Management. It trades about 0.06 of its potential returns per unit of risk. Strategic Asset Management is currently generating about 0.12 per unit of risk. If you would invest 32,151 in Microsoft on August 31, 2024 and sell it today you would earn a total of 10,195 from holding Microsoft or generate 31.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Strategic Asset Management
Performance |
| Timeline |
| Microsoft |
| Strategic Asset Mana |
Microsoft and Strategic Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Strategic Asset
The main advantage of trading using opposite Microsoft and Strategic Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Strategic Asset 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 Strategic Asset will offset losses from the drop in Strategic Asset's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Strategic Asset vs. Federated Ohio Municipal | Strategic Asset vs. Oklahoma Municipal Fund | Strategic Asset vs. Transamerica Intermediate Muni | Strategic Asset vs. Legg Mason Partners |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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