Correlation Between Microsoft and Sharp
Can any of the company-specific risk be diversified away by investing in both Microsoft and Sharp 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 Sharp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Sharp, you can compare the effects of market volatilities on Microsoft and Sharp 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 Sharp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Sharp.
Diversification Opportunities for Microsoft and Sharp
Excellent diversification
The 3 months correlation between Microsoft and Sharp is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sharp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharp 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 Sharp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharp has no effect on the direction of Microsoft i.e., Microsoft and Sharp go up and down completely randomly.
Pair Corralation between Microsoft and Sharp
If you would invest 585.00 in Sharp on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Sharp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Sharp
Performance |
| Timeline |
| Microsoft |
| Sharp |
Microsoft and Sharp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Sharp
The main advantage of trading using opposite Microsoft and Sharp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Sharp 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 Sharp will offset losses from the drop in Sharp's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Sharp vs. TCL Electronics Holdings | Sharp vs. Casio Computer Co | Sharp vs. Xiaomi Corp | Sharp vs. Samsung Electronics Co |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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