Correlation Between Microsoft and UNITED BANK
Can any of the company-specific risk be diversified away by investing in both Microsoft and UNITED BANK 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 UNITED BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and UNITED BANK FOR, you can compare the effects of market volatilities on Microsoft and UNITED BANK 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 UNITED BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and UNITED BANK.
Diversification Opportunities for Microsoft and UNITED BANK
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and UNITED is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and UNITED BANK FOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED BANK FOR 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 UNITED BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED BANK FOR has no effect on the direction of Microsoft i.e., Microsoft and UNITED BANK go up and down completely randomly.
Pair Corralation between Microsoft and UNITED BANK
Given the investment horizon of 90 days Microsoft is expected to under-perform the UNITED BANK. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.29 times less risky than UNITED BANK. The stock trades about -0.04 of its potential returns per unit of risk. The UNITED BANK FOR is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,000 in UNITED BANK FOR on August 31, 2024 and sell it today you would earn a total of 250.00 from holding UNITED BANK FOR or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. UNITED BANK FOR
Performance |
| Timeline |
| Microsoft |
| UNITED BANK FOR |
Microsoft and UNITED BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and UNITED BANK
The main advantage of trading using opposite Microsoft and UNITED BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, UNITED BANK 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 UNITED BANK will offset losses from the drop in UNITED BANK's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| UNITED BANK vs. GOLDEN GUINEA BREWERIES | UNITED BANK vs. CORONATION INSURANCE PLC | UNITED BANK vs. GOLDLINK INSURANCE PLC | UNITED BANK vs. INTERNATIONAL ENERGY INSURANCE |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |