Correlation Between Microsoft and Shoals Technologies
Can any of the company-specific risk be diversified away by investing in both Microsoft and Shoals Technologies 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 Shoals Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Shoals Technologies Group, you can compare the effects of market volatilities on Microsoft and Shoals Technologies 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 Shoals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Shoals Technologies.
Diversification Opportunities for Microsoft and Shoals Technologies
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Shoals is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Shoals Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoals Technologies 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 Shoals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoals Technologies has no effect on the direction of Microsoft i.e., Microsoft and Shoals Technologies go up and down completely randomly.
Pair Corralation between Microsoft and Shoals Technologies
Given the investment horizon of 90 days Microsoft is expected to generate 0.27 times more return on investment than Shoals Technologies. However, Microsoft is 3.64 times less risky than Shoals Technologies. It trades about -0.04 of its potential returns per unit of risk. Shoals Technologies Group is currently generating about -0.01 per unit of risk. If you would invest 42,574 in Microsoft on August 28, 2024 and sell it today you would lose (695.00) from holding Microsoft or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Shoals Technologies Group
Performance |
| Timeline |
| Microsoft |
| Shoals Technologies |
Microsoft and Shoals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Shoals Technologies
The main advantage of trading using opposite Microsoft and Shoals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Shoals Technologies 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 Shoals Technologies will offset losses from the drop in Shoals Technologies' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Shoals Technologies vs. 1847 Holdings LLC | Shoals Technologies vs. Westport Fuel Systems | Shoals Technologies vs. Falcons Beyond Global, | Shoals Technologies vs. Brookfield Business Partners |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |