Correlation Between Microsoft and AMERICAN
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By analyzing existing cross correlation between Microsoft and AMERICAN WTR CAP, you can compare the effects of market volatilities on Microsoft and AMERICAN 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 AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AMERICAN.
Diversification Opportunities for Microsoft and AMERICAN
Average diversification
The 3 months correlation between Microsoft and AMERICAN is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AMERICAN WTR CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN WTR CAP 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN WTR CAP has no effect on the direction of Microsoft i.e., Microsoft and AMERICAN go up and down completely randomly.
Pair Corralation between Microsoft and AMERICAN
Given the investment horizon of 90 days Microsoft is expected to generate 1.79 times more return on investment than AMERICAN. However, Microsoft is 1.79 times more volatile than AMERICAN WTR CAP. It trades about 0.08 of its potential returns per unit of risk. AMERICAN WTR CAP 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 | 54.03% |
| Values | Daily Returns |
Microsoft vs. AMERICAN WTR CAP
Performance |
| Timeline |
| Microsoft |
| AMERICAN WTR CAP |
Microsoft and AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AMERICAN
The main advantage of trading using opposite Microsoft and AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AMERICAN 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 AMERICAN will offset losses from the drop in AMERICAN's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| AMERICAN vs. Ihuman Inc | AMERICAN vs. Broadstone Net Lease | AMERICAN vs. China Aircraft Leasing | AMERICAN vs. HE Equipment Services |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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