Correlation Between Microsoft and Themes Cybersecurity
Can any of the company-specific risk be diversified away by investing in both Microsoft and Themes Cybersecurity 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 Themes Cybersecurity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Themes Cybersecurity ETF, you can compare the effects of market volatilities on Microsoft and Themes Cybersecurity 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 Themes Cybersecurity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Themes Cybersecurity.
Diversification Opportunities for Microsoft and Themes Cybersecurity
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Themes is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Themes Cybersecurity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Cybersecurity ETF 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 Themes Cybersecurity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Cybersecurity ETF has no effect on the direction of Microsoft i.e., Microsoft and Themes Cybersecurity go up and down completely randomly.
Pair Corralation between Microsoft and Themes Cybersecurity
Given the investment horizon of 90 days Microsoft is expected to under-perform the Themes Cybersecurity. In addition to that, Microsoft is 1.04 times more volatile than Themes Cybersecurity ETF. It trades about -0.05 of its total potential returns per unit of risk. Themes Cybersecurity ETF is currently generating about 0.11 per unit of volatility. If you would invest 2,857 in Themes Cybersecurity ETF on August 26, 2024 and sell it today you would earn a total of 168.00 from holding Themes Cybersecurity ETF or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Themes Cybersecurity ETF
Performance |
| Timeline |
| Microsoft |
| Themes Cybersecurity ETF |
Microsoft and Themes Cybersecurity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Themes Cybersecurity
The main advantage of trading using opposite Microsoft and Themes Cybersecurity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Themes Cybersecurity 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 Themes Cybersecurity will offset losses from the drop in Themes Cybersecurity's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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