Correlation Between Microsoft and AB Sagax
Can any of the company-specific risk be diversified away by investing in both Microsoft and AB Sagax 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 AB Sagax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AB Sagax, you can compare the effects of market volatilities on Microsoft and AB Sagax 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 AB Sagax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AB Sagax.
Diversification Opportunities for Microsoft and AB Sagax
Very good diversification
The 3 months correlation between Microsoft and SAGA-A is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AB Sagax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Sagax 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 AB Sagax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Sagax has no effect on the direction of Microsoft i.e., Microsoft and AB Sagax go up and down completely randomly.
Pair Corralation between Microsoft and AB Sagax
Given the investment horizon of 90 days Microsoft is expected to generate 2.87 times less return on investment than AB Sagax. But when comparing it to its historical volatility, Microsoft is 1.85 times less risky than AB Sagax. It trades about 0.08 of its potential returns per unit of risk. AB Sagax is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 22,600 in AB Sagax on October 26, 2024 and sell it today you would earn a total of 1,200 from holding AB Sagax or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Microsoft vs. AB Sagax
Performance |
| Timeline |
| Microsoft |
| AB Sagax |
Microsoft and AB Sagax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AB Sagax
The main advantage of trading using opposite Microsoft and AB Sagax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AB Sagax 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 AB Sagax will offset losses from the drop in AB Sagax's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| AB Sagax vs. SolTech Energy Sweden | AB Sagax vs. White Pearl Technology | AB Sagax vs. USWE Sports AB | AB Sagax vs. Viva Wine Group |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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