Correlation Between Microsoft and Thornburg Strategic
Can any of the company-specific risk be diversified away by investing in both Microsoft and Thornburg Strategic 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 Thornburg Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Thornburg Strategic Income, you can compare the effects of market volatilities on Microsoft and Thornburg Strategic 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 Thornburg Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Thornburg Strategic.
Diversification Opportunities for Microsoft and Thornburg Strategic
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Thornburg is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Thornburg Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Strategic 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 Thornburg Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Strategic has no effect on the direction of Microsoft i.e., Microsoft and Thornburg Strategic go up and down completely randomly.
Pair Corralation between Microsoft and Thornburg Strategic
Given the investment horizon of 90 days Microsoft is expected to generate 5.24 times more return on investment than Thornburg Strategic. However, Microsoft is 5.24 times more volatile than Thornburg Strategic Income. It trades about 0.17 of its potential returns per unit of risk. Thornburg Strategic Income is currently generating about 0.1 per unit of risk. If you would invest 40,764 in Microsoft on September 3, 2024 and sell it today you would earn a total of 1,582 from holding Microsoft or generate 3.88% 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. Thornburg Strategic Income
Performance |
| Timeline |
| Microsoft |
| Thornburg Strategic |
Microsoft and Thornburg Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Thornburg Strategic
The main advantage of trading using opposite Microsoft and Thornburg Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Thornburg Strategic 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 Thornburg Strategic will offset losses from the drop in Thornburg Strategic's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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