Correlation Between Microsoft and VelocityShares
Can any of the company-specific risk be diversified away by investing in both Microsoft and VelocityShares 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 VelocityShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and VelocityShares 3x Long, you can compare the effects of market volatilities on Microsoft and VelocityShares 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 VelocityShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and VelocityShares.
Diversification Opportunities for Microsoft and VelocityShares
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and VelocityShares is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and VelocityShares 3x Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VelocityShares 3x Long 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 VelocityShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VelocityShares 3x Long has no effect on the direction of Microsoft i.e., Microsoft and VelocityShares go up and down completely randomly.
Pair Corralation between Microsoft and VelocityShares
If you would invest 41,123 in Microsoft on September 3, 2024 and sell it today you would earn a total of 1,223 from holding Microsoft or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.68% |
| Values | Daily Returns |
Microsoft vs. VelocityShares 3x Long
Performance |
| Timeline |
| Microsoft |
| VelocityShares 3x Long |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and VelocityShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and VelocityShares
The main advantage of trading using opposite Microsoft and VelocityShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, VelocityShares 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 VelocityShares will offset losses from the drop in VelocityShares' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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