Correlation Between Microsoft and TG Therapeutics
Can any of the company-specific risk be diversified away by investing in both Microsoft and TG Therapeutics 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 TG Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and TG Therapeutics, you can compare the effects of market volatilities on Microsoft and TG Therapeutics 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 TG Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and TG Therapeutics.
Diversification Opportunities for Microsoft and TG Therapeutics
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and TGTX is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and TG Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TG Therapeutics 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 TG Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TG Therapeutics has no effect on the direction of Microsoft i.e., Microsoft and TG Therapeutics go up and down completely randomly.
Pair Corralation between Microsoft and TG Therapeutics
Given the investment horizon of 90 days Microsoft is expected to generate 3.97 times less return on investment than TG Therapeutics. But when comparing it to its historical volatility, Microsoft is 3.82 times less risky than TG Therapeutics. It trades about 0.08 of its potential returns per unit of risk. TG Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 816.00 in TG Therapeutics on August 24, 2024 and sell it today you would earn a total of 2,691 from holding TG Therapeutics or generate 329.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. TG Therapeutics
Performance |
| Timeline |
| Microsoft |
| TG Therapeutics |
Microsoft and TG Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and TG Therapeutics
The main advantage of trading using opposite Microsoft and TG Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, TG Therapeutics 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 TG Therapeutics will offset losses from the drop in TG Therapeutics' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| TG Therapeutics vs. Madrigal Pharmaceuticals | TG Therapeutics vs. Terns Pharmaceuticals | TG Therapeutics vs. Hepion Pharmaceuticals | TG Therapeutics vs. Exelixis |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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