Correlation Between Microsoft and Star Alliance
Can any of the company-specific risk be diversified away by investing in both Microsoft and Star Alliance 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 Star Alliance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Star Alliance International, you can compare the effects of market volatilities on Microsoft and Star Alliance 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 Star Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Star Alliance.
Diversification Opportunities for Microsoft and Star Alliance
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Star is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Star Alliance International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Alliance Intern 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 Star Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Alliance Intern has no effect on the direction of Microsoft i.e., Microsoft and Star Alliance go up and down completely randomly.
Pair Corralation between Microsoft and Star Alliance
Given the investment horizon of 90 days Microsoft is expected to generate 0.12 times more return on investment than Star Alliance. However, Microsoft is 8.47 times less risky than Star Alliance. It trades about 0.19 of its potential returns per unit of risk. Star Alliance International is currently generating about -0.17 per unit of risk. If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Microsoft vs. Star Alliance International
Performance |
| Timeline |
| Microsoft |
| Star Alliance Intern |
Microsoft and Star Alliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Star Alliance
The main advantage of trading using opposite Microsoft and Star Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Star Alliance 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 Star Alliance will offset losses from the drop in Star Alliance's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Star Alliance vs. Vior Inc | Star Alliance vs. Norsemont Mining | Star Alliance vs. Big Ridge Gold | Star Alliance vs. Cerrado Gold |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |