Correlation Between Microsoft and Splash Beverage
Can any of the company-specific risk be diversified away by investing in both Microsoft and Splash Beverage 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 Splash Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Splash Beverage Group, you can compare the effects of market volatilities on Microsoft and Splash Beverage 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 Splash Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Splash Beverage.
Diversification Opportunities for Microsoft and Splash Beverage
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Splash is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Splash Beverage Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Splash Beverage Group 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 Splash Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Splash Beverage Group has no effect on the direction of Microsoft i.e., Microsoft and Splash Beverage go up and down completely randomly.
Pair Corralation between Microsoft and Splash Beverage
Given the investment horizon of 90 days Microsoft is expected to under-perform the Splash Beverage. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 3.03 times less risky than Splash Beverage. The stock trades about -0.04 of its potential returns per unit of risk. The Splash Beverage Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Splash Beverage Group on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Splash Beverage Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Splash Beverage Group
Performance |
| Timeline |
| Microsoft |
| Splash Beverage Group |
Microsoft and Splash Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Splash Beverage
The main advantage of trading using opposite Microsoft and Splash Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Splash Beverage 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 Splash Beverage will offset losses from the drop in Splash Beverage's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Splash Beverage vs. Iconic Brands | Splash Beverage vs. Eastside Distilling | Splash Beverage vs. Andrew Peller Limited | Splash Beverage vs. Duckhorn Portfolio |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |