Correlation Between Microsoft and AMAZONCOM
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By analyzing existing cross correlation between Microsoft and AMAZONCOM INC, you can compare the effects of market volatilities on Microsoft and AMAZONCOM 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 AMAZONCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AMAZONCOM.
Diversification Opportunities for Microsoft and AMAZONCOM
Significant diversification
The 3 months correlation between Microsoft and AMAZONCOM is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AMAZONCOM INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAZONCOM 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 AMAZONCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAZONCOM INC has no effect on the direction of Microsoft i.e., Microsoft and AMAZONCOM go up and down completely randomly.
Pair Corralation between Microsoft and AMAZONCOM
Given the investment horizon of 90 days Microsoft is expected to generate 2.24 times more return on investment than AMAZONCOM. However, Microsoft is 2.24 times more volatile than AMAZONCOM INC. It trades about 0.08 of its potential returns per unit of risk. AMAZONCOM INC is currently generating about -0.01 per unit of risk. If you would invest 24,843 in Microsoft on September 2, 2024 and sell it today you would earn a total of 17,503 from holding Microsoft or generate 70.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Microsoft vs. AMAZONCOM INC
Performance |
| Timeline |
| Microsoft |
| AMAZONCOM INC |
Microsoft and AMAZONCOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AMAZONCOM
The main advantage of trading using opposite Microsoft and AMAZONCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AMAZONCOM 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 AMAZONCOM will offset losses from the drop in AMAZONCOM's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| AMAZONCOM vs. Highway Holdings Limited | AMAZONCOM vs. Cimpress NV | AMAZONCOM vs. Marchex | AMAZONCOM vs. Fluent 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 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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