Correlation Between Microsoft and Core Fixed
Can any of the company-specific risk be diversified away by investing in both Microsoft and Core Fixed 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 Core Fixed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Core Fixed Income, you can compare the effects of market volatilities on Microsoft and Core Fixed 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 Core Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Core Fixed.
Diversification Opportunities for Microsoft and Core Fixed
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Core is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Core Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Fixed Income 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 Core Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Fixed Income has no effect on the direction of Microsoft i.e., Microsoft and Core Fixed go up and down completely randomly.
Pair Corralation between Microsoft and Core Fixed
Given the investment horizon of 90 days Microsoft is expected to under-perform the Core Fixed. In addition to that, Microsoft is 4.86 times more volatile than Core Fixed Income. It trades about -0.04 of its total potential returns per unit of risk. Core Fixed Income is currently generating about 0.09 per unit of volatility. If you would invest 678.00 in Core Fixed Income on August 30, 2024 and sell it today you would earn a total of 5.00 from holding Core Fixed Income or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Core Fixed Income
Performance |
| Timeline |
| Microsoft |
| Core Fixed Income |
Microsoft and Core Fixed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Core Fixed
The main advantage of trading using opposite Microsoft and Core Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Core Fixed 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 Core Fixed will offset losses from the drop in Core Fixed's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Core Fixed vs. Transamerica Emerging Markets | Core Fixed vs. Ep Emerging Markets | Core Fixed vs. Barings Emerging Markets | Core Fixed vs. Shelton 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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