Correlation Between Microsoft and Southwestern
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By analyzing existing cross correlation between Microsoft and Southwestern Energy 495, you can compare the effects of market volatilities on Microsoft and Southwestern 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 Southwestern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Southwestern.
Diversification Opportunities for Microsoft and Southwestern
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Southwestern is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Southwestern Energy 495 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwestern Energy 495 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 Southwestern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwestern Energy 495 has no effect on the direction of Microsoft i.e., Microsoft and Southwestern go up and down completely randomly.
Pair Corralation between Microsoft and Southwestern
Given the investment horizon of 90 days Microsoft is expected to generate 1.94 times more return on investment than Southwestern. However, Microsoft is 1.94 times more volatile than Southwestern Energy 495. It trades about -0.07 of its potential returns per unit of risk. Southwestern Energy 495 is currently generating about -0.14 per unit of risk. If you would invest 43,525 in Microsoft on October 23, 2024 and sell it today you would lose (622.00) from holding Microsoft or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.89% |
| Values | Daily Returns |
Microsoft vs. Southwestern Energy 495
Performance |
| Timeline |
| Microsoft |
| Southwestern Energy 495 |
Microsoft and Southwestern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Southwestern
The main advantage of trading using opposite Microsoft and Southwestern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Southwestern 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 Southwestern will offset losses from the drop in Southwestern's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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