Correlation Between Microsoft and Sachem Capital
Can any of the company-specific risk be diversified away by investing in both Microsoft and Sachem Capital 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 Sachem Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Sachem Capital Corp, you can compare the effects of market volatilities on Microsoft and Sachem Capital 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 Sachem Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Sachem Capital.
Diversification Opportunities for Microsoft and Sachem Capital
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Sachem is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sachem Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sachem Capital Corp 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 Sachem Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sachem Capital Corp has no effect on the direction of Microsoft i.e., Microsoft and Sachem Capital go up and down completely randomly.
Pair Corralation between Microsoft and Sachem Capital
Given the investment horizon of 90 days Microsoft is expected to under-perform the Sachem Capital. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.15 times less risky than Sachem Capital. The stock trades about -0.1 of its potential returns per unit of risk. The Sachem Capital Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 118.00 in Sachem Capital Corp on January 18, 2025 and sell it today you would lose (18.00) from holding Sachem Capital Corp or give up 15.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Sachem Capital Corp
Performance |
| Timeline |
| Microsoft |
| Sachem Capital Corp |
Microsoft and Sachem Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Sachem Capital
The main advantage of trading using opposite Microsoft and Sachem Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Sachem Capital 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 Sachem Capital will offset losses from the drop in Sachem Capital's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Sachem Capital vs. Apollo Commercial Real | Sachem Capital vs. Ready Capital Corp | Sachem Capital vs. Ellington Residential Mortgage | Sachem Capital vs. KKR Real Estate |
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.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |