Correlation Between Microsoft and Security Federal
Can any of the company-specific risk be diversified away by investing in both Microsoft and Security Federal 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 Security Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Security Federal, you can compare the effects of market volatilities on Microsoft and Security Federal 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 Security Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Security Federal.
Diversification Opportunities for Microsoft and Security Federal
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Security is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Security Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Federal 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 Security Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Federal has no effect on the direction of Microsoft i.e., Microsoft and Security Federal go up and down completely randomly.
Pair Corralation between Microsoft and Security Federal
Given the investment horizon of 90 days Microsoft is expected to under-perform the Security Federal. In addition to that, Microsoft is 2.19 times more volatile than Security Federal. It trades about -0.04 of its total potential returns per unit of risk. Security Federal is currently generating about 0.21 per unit of volatility. If you would invest 2,701 in Security Federal on August 31, 2024 and sell it today you would earn a total of 99.00 from holding Security Federal or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. Security Federal
Performance |
| Timeline |
| Microsoft |
| Security Federal |
Microsoft and Security Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Security Federal
The main advantage of trading using opposite Microsoft and Security Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Security Federal 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 Security Federal will offset losses from the drop in Security Federal's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Security Federal vs. MF Bancorp | Security Federal vs. Merchants Marine Bancorp | Security Federal vs. MNB Holdings Corp | Security Federal vs. United Bancorporation of |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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