Correlation Between Microsoft and KINDER
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By analyzing existing cross correlation between Microsoft and KINDER MORGAN ENERGY, you can compare the effects of market volatilities on Microsoft and KINDER 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 KINDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and KINDER.
Diversification Opportunities for Microsoft and KINDER
Very weak diversification
The 3 months correlation between Microsoft and KINDER is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and KINDER MORGAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN ENERGY 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN ENERGY has no effect on the direction of Microsoft i.e., Microsoft and KINDER go up and down completely randomly.
Pair Corralation between Microsoft and KINDER
Given the investment horizon of 90 days Microsoft is expected to generate 40.28 times less return on investment than KINDER. But when comparing it to its historical volatility, Microsoft is 49.94 times less risky than KINDER. It trades about 0.08 of its potential returns per unit of risk. KINDER MORGAN ENERGY is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11,120 in KINDER MORGAN ENERGY on September 3, 2024 and sell it today you would lose (338.00) from holding KINDER MORGAN ENERGY or give up 3.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 78.79% |
| Values | Daily Returns |
Microsoft vs. KINDER MORGAN ENERGY
Performance |
| Timeline |
| Microsoft |
| KINDER MORGAN ENERGY |
Microsoft and KINDER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and KINDER
The main advantage of trading using opposite Microsoft and KINDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, KINDER 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 KINDER will offset losses from the drop in KINDER'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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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