Correlation Between Microsoft and GENERAL
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By analyzing existing cross correlation between Microsoft and GENERAL ELEC CAP, you can compare the effects of market volatilities on Microsoft and GENERAL 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 GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and GENERAL.
Diversification Opportunities for Microsoft and GENERAL
Average diversification
The 3 months correlation between Microsoft and GENERAL is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and GENERAL ELEC CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GENERAL ELEC 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 GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GENERAL ELEC CAP has no effect on the direction of Microsoft i.e., Microsoft and GENERAL go up and down completely randomly.
Pair Corralation between Microsoft and GENERAL
Given the investment horizon of 90 days Microsoft is expected to generate 1.56 times more return on investment than GENERAL. However, Microsoft is 1.56 times more volatile than GENERAL ELEC CAP. It trades about -0.04 of its potential returns per unit of risk. GENERAL ELEC CAP is currently generating about -0.2 per unit of risk. If you would invest 42,388 in Microsoft on August 25, 2024 and sell it today you would lose (688.00) from holding Microsoft or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 68.18% |
| Values | Daily Returns |
Microsoft vs. GENERAL ELEC CAP
Performance |
| Timeline |
| Microsoft |
| GENERAL ELEC CAP |
Microsoft and GENERAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and GENERAL
The main advantage of trading using opposite Microsoft and GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, GENERAL 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 GENERAL will offset losses from the drop in GENERAL's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| GENERAL vs. Avient Corp | GENERAL vs. Rackspace Technology | GENERAL vs. Qualys Inc | GENERAL vs. VirnetX Holding Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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