Correlation Between Microsoft and LEGGETT
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By analyzing existing cross correlation between Microsoft and LEGGETT PLATT INC, you can compare the effects of market volatilities on Microsoft and LEGGETT 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 LEGGETT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and LEGGETT.
Diversification Opportunities for Microsoft and LEGGETT
Average diversification
The 3 months correlation between Microsoft and LEGGETT is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and LEGGETT PLATT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGGETT PLATT 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 LEGGETT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGGETT PLATT INC has no effect on the direction of Microsoft i.e., Microsoft and LEGGETT go up and down completely randomly.
Pair Corralation between Microsoft and LEGGETT
Given the investment horizon of 90 days Microsoft is expected to generate 33.87 times less return on investment than LEGGETT. But when comparing it to its historical volatility, Microsoft is 42.82 times less risky than LEGGETT. It trades about 0.06 of its potential returns per unit of risk. LEGGETT PLATT INC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,282 in LEGGETT PLATT INC on September 1, 2024 and sell it today you would earn a total of 112.00 from holding LEGGETT PLATT INC or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.17% |
| Values | Daily Returns |
Microsoft vs. LEGGETT PLATT INC
Performance |
| Timeline |
| Microsoft |
| LEGGETT PLATT INC |
Microsoft and LEGGETT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and LEGGETT
The main advantage of trading using opposite Microsoft and LEGGETT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, LEGGETT 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 LEGGETT will offset losses from the drop in LEGGETT'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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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