Correlation Between Microsoft and Sit Balanced
Can any of the company-specific risk be diversified away by investing in both Microsoft and Sit Balanced 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 Sit Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Sit Balanced Fund, you can compare the effects of market volatilities on Microsoft and Sit Balanced 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 Sit Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Sit Balanced.
Diversification Opportunities for Microsoft and Sit Balanced
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Sit is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sit Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Balanced 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 Sit Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Balanced has no effect on the direction of Microsoft i.e., Microsoft and Sit Balanced go up and down completely randomly.
Pair Corralation between Microsoft and Sit Balanced
Given the investment horizon of 90 days Microsoft is expected to generate 2.29 times more return on investment than Sit Balanced. However, Microsoft is 2.29 times more volatile than Sit Balanced Fund. It trades about 0.08 of its potential returns per unit of risk. Sit Balanced Fund is currently generating about 0.11 per unit of risk. If you would invest 24,616 in Microsoft on August 26, 2024 and sell it today you would earn a total of 17,084 from holding Microsoft or generate 69.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Sit Balanced Fund
Performance |
| Timeline |
| Microsoft |
| Sit Balanced |
Microsoft and Sit Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Sit Balanced
The main advantage of trading using opposite Microsoft and Sit Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Sit Balanced 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 Sit Balanced will offset losses from the drop in Sit Balanced's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
| Sit Balanced vs. Value Line Asset | Sit Balanced vs. Sit Large Cap | Sit Balanced vs. Sit Small Cap | Sit Balanced vs. Plumb Balanced Fund |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets |