Correlation Between Microsoft and ALTRIA
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By analyzing existing cross correlation between Microsoft and ALTRIA GROUP INC, you can compare the effects of market volatilities on Microsoft and ALTRIA 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 ALTRIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ALTRIA.
Diversification Opportunities for Microsoft and ALTRIA
Significant diversification
The 3 months correlation between Microsoft and ALTRIA is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ALTRIA GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTRIA GROUP INC 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 ALTRIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTRIA GROUP INC has no effect on the direction of Microsoft i.e., Microsoft and ALTRIA go up and down completely randomly.
Pair Corralation between Microsoft and ALTRIA
Given the investment horizon of 90 days Microsoft is expected to generate 0.36 times more return on investment than ALTRIA. However, Microsoft is 2.78 times less risky than ALTRIA. It trades about 0.15 of its potential returns per unit of risk. ALTRIA GROUP INC is currently generating about -0.14 per unit of risk. If you would invest 40,955 in Microsoft on September 2, 2024 and sell it today you would earn a total of 1,391 from holding Microsoft or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Microsoft vs. ALTRIA GROUP INC
Performance |
| Timeline |
| Microsoft |
| ALTRIA GROUP INC |
Microsoft and ALTRIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ALTRIA
The main advantage of trading using opposite Microsoft and ALTRIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ALTRIA 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 ALTRIA will offset losses from the drop in ALTRIA's 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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