Correlation Between Microsoft and Touchstone Sands
Can any of the company-specific risk be diversified away by investing in both Microsoft and Touchstone Sands 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 Touchstone Sands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Touchstone Sands Capital, you can compare the effects of market volatilities on Microsoft and Touchstone Sands 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 Touchstone Sands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Touchstone Sands.
Diversification Opportunities for Microsoft and Touchstone Sands
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and TOUCHSTONE is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Touchstone Sands Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Sands Capital 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 Touchstone Sands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Sands Capital has no effect on the direction of Microsoft i.e., Microsoft and Touchstone Sands go up and down completely randomly.
Pair Corralation between Microsoft and Touchstone Sands
Given the investment horizon of 90 days Microsoft is expected to generate 2.34 times more return on investment than Touchstone Sands. However, Microsoft is 2.34 times more volatile than Touchstone Sands Capital. It trades about 0.0 of its potential returns per unit of risk. Touchstone Sands Capital is currently generating about -0.2 per unit of risk. If you would invest 42,574 in Microsoft on August 29, 2024 and sell it today you would lose (188.00) from holding Microsoft or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Touchstone Sands Capital
Performance |
| Timeline |
| Microsoft |
| Touchstone Sands Capital |
Microsoft and Touchstone Sands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Touchstone Sands
The main advantage of trading using opposite Microsoft and Touchstone Sands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Touchstone Sands 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 Touchstone Sands will offset losses from the drop in Touchstone Sands' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Touchstone Sands vs. Guggenheim Diversified Income | Touchstone Sands vs. Tiaa Cref Smallmid Cap Equity | Touchstone Sands vs. American Century Diversified | Touchstone Sands vs. Tax Managed Mid Small |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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