Correlation Between Microsoft and STATE
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By analyzing existing cross correlation between Microsoft and STATE STR P, you can compare the effects of market volatilities on Microsoft and STATE 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 STATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and STATE.
Diversification Opportunities for Microsoft and STATE
Average diversification
The 3 months correlation between Microsoft and STATE is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and STATE STR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STATE STR P 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 STATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STATE STR P has no effect on the direction of Microsoft i.e., Microsoft and STATE go up and down completely randomly.
Pair Corralation between Microsoft and STATE
Given the investment horizon of 90 days Microsoft is expected to generate 5.6 times more return on investment than STATE. However, Microsoft is 5.6 times more volatile than STATE STR P. It trades about 0.05 of its potential returns per unit of risk. STATE STR P is currently generating about -0.1 per unit of risk. If you would invest 40,862 in Microsoft on September 2, 2024 and sell it today you would earn a total of 1,484 from holding Microsoft or generate 3.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.88% |
| Values | Daily Returns |
Microsoft vs. STATE STR P
Performance |
| Timeline |
| Microsoft |
| STATE STR P |
Microsoft and STATE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and STATE
The main advantage of trading using opposite Microsoft and STATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, STATE 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 STATE will offset losses from the drop in STATE'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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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