Correlation Between Microsoft and FEDEX
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By analyzing existing cross correlation between Microsoft and FEDEX P 34, you can compare the effects of market volatilities on Microsoft and FEDEX 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 FEDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and FEDEX.
Diversification Opportunities for Microsoft and FEDEX
Modest diversification
The 3 months correlation between Microsoft and FEDEX is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and FEDEX P 34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEDEX P 34 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 FEDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEDEX P 34 has no effect on the direction of Microsoft i.e., Microsoft and FEDEX go up and down completely randomly.
Pair Corralation between Microsoft and FEDEX
Given the investment horizon of 90 days Microsoft is expected to generate 2.9 times more return on investment than FEDEX. However, Microsoft is 2.9 times more volatile than FEDEX P 34. It trades about 0.09 of its potential returns per unit of risk. FEDEX P 34 is currently generating about 0.0 per unit of risk. If you would invest 24,146 in Microsoft on August 30, 2024 and sell it today you would earn a total of 18,153 from holding Microsoft or generate 75.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.55% |
| Values | Daily Returns |
Microsoft vs. FEDEX P 34
Performance |
| Timeline |
| Microsoft |
| FEDEX P 34 |
Microsoft and FEDEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and FEDEX
The main advantage of trading using opposite Microsoft and FEDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, FEDEX 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 FEDEX will offset losses from the drop in FEDEX'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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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