Correlation Between Microsoft and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both Microsoft and Timothy Plan 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 Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Timothy Plan Market, you can compare the effects of market volatilities on Microsoft and Timothy Plan 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 Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Timothy Plan.
Diversification Opportunities for Microsoft and Timothy Plan
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Timothy is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Timothy Plan Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Market 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 Timothy Plan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Plan Market has no effect on the direction of Microsoft i.e., Microsoft and Timothy Plan go up and down completely randomly.
Pair Corralation between Microsoft and Timothy Plan
Given the investment horizon of 90 days Microsoft is expected to under-perform the Timothy Plan. In addition to that, Microsoft is 6.24 times more volatile than Timothy Plan Market. It trades about -0.04 of its total potential returns per unit of risk. Timothy Plan Market is currently generating about 0.1 per unit of volatility. If you would invest 2,382 in Timothy Plan Market on August 28, 2024 and sell it today you would earn a total of 14.00 from holding Timothy Plan Market or generate 0.59% 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. Timothy Plan Market
Performance |
| Timeline |
| Microsoft |
| Timothy Plan Market |
Microsoft and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Timothy Plan
The main advantage of trading using opposite Microsoft and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Timothy Plan 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 Timothy Plan will offset losses from the drop in Timothy Plan's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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