Correlation Between Microsoft and Sit Emerging
Can any of the company-specific risk be diversified away by investing in both Microsoft and Sit Emerging 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 Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Sit Emerging Markets, you can compare the effects of market volatilities on Microsoft and Sit Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Sit Emerging.
Diversification Opportunities for Microsoft and Sit Emerging
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Sit is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sit Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Emerging Markets has no effect on the direction of Microsoft i.e., Microsoft and Sit Emerging go up and down completely randomly.
Pair Corralation between Microsoft and Sit Emerging
Given the investment horizon of 90 days Microsoft is expected to under-perform the Sit Emerging. In addition to that, Microsoft is 5.01 times more volatile than Sit Emerging Markets. It trades about -0.04 of its total potential returns per unit of risk. Sit Emerging Markets is currently generating about 0.27 per unit of volatility. If you would invest 848.00 in Sit Emerging Markets on November 4, 2024 and sell it today you would earn a total of 19.00 from holding Sit Emerging Markets or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Sit Emerging Markets
Performance |
| Timeline |
| Microsoft |
| Sit Emerging Markets |
Microsoft and Sit Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Sit Emerging
The main advantage of trading using opposite Microsoft and Sit Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Sit Emerging 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 Emerging will offset losses from the drop in Sit Emerging's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Sit Emerging vs. Guggenheim Managed Futures | Sit Emerging vs. Guidepath Managed Futures | Sit Emerging vs. Credit Suisse Multialternative | Sit Emerging vs. Tiaa Cref Inflation Link |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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