Correlation Between Microsoft and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Microsoft and Nasdaq 100 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 Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Nasdaq 100 Index Fund, you can compare the effects of market volatilities on Microsoft and Nasdaq 100 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 Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Nasdaq 100.
Diversification Opportunities for Microsoft and Nasdaq 100
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Nasdaq is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Nasdaq 100 Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Index 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 Nasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 Index has no effect on the direction of Microsoft i.e., Microsoft and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Microsoft and Nasdaq 100
Given the investment horizon of 90 days Microsoft is expected to generate 1.23 times less return on investment than Nasdaq 100. In addition to that, Microsoft is 1.19 times more volatile than Nasdaq 100 Index Fund. It trades about 0.06 of its total potential returns per unit of risk. Nasdaq 100 Index Fund is currently generating about 0.09 per unit of volatility. If you would invest 3,687 in Nasdaq 100 Index Fund on August 31, 2024 and sell it today you would earn a total of 1,575 from holding Nasdaq 100 Index Fund or generate 42.72% 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. Nasdaq 100 Index Fund
Performance |
| Timeline |
| Microsoft |
| Nasdaq 100 Index |
Microsoft and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Nasdaq 100
The main advantage of trading using opposite Microsoft and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Nasdaq 100 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 Nasdaq 100 will offset losses from the drop in Nasdaq 100's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Nasdaq 100 vs. Europacific Growth Fund | Nasdaq 100 vs. Washington Mutual Investors | Nasdaq 100 vs. Capital World Growth | Nasdaq 100 vs. HUMANA INC |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |