Correlation Between Microsoft and Templeton Global
Can any of the company-specific risk be diversified away by investing in both Microsoft and Templeton Global 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 Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Templeton Global AD, you can compare the effects of market volatilities on Microsoft and Templeton Global 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 Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Templeton Global.
Diversification Opportunities for Microsoft and Templeton Global
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Templeton is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Templeton Global AD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global 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 Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global has no effect on the direction of Microsoft i.e., Microsoft and Templeton Global go up and down completely randomly.
Pair Corralation between Microsoft and Templeton Global
Given the investment horizon of 90 days Microsoft is expected to generate 1.58 times more return on investment than Templeton Global. However, Microsoft is 1.58 times more volatile than Templeton Global AD. It trades about 0.03 of its potential returns per unit of risk. Templeton Global AD is currently generating about -0.06 per unit of risk. If you would invest 40,764 in Microsoft on November 3, 2024 and sell it today you would earn a total of 742.00 from holding Microsoft or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.36% |
| Values | Daily Returns |
Microsoft vs. Templeton Global AD
Performance |
| Timeline |
| Microsoft |
| Templeton Global |
Microsoft and Templeton Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Templeton Global
The main advantage of trading using opposite Microsoft and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Templeton Global 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 Templeton Global will offset losses from the drop in Templeton Global's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Templeton Global vs. Templeton Global Bond | Templeton Global vs. Templeton Asian Bond | Templeton Global vs. Templeton Global Bond | Templeton Global vs. Templeton Emerging Markets |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |