Correlation Between Microsoft and WISCONSIN
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By analyzing existing cross correlation between Microsoft and WISCONSIN ELEC PWR, you can compare the effects of market volatilities on Microsoft and WISCONSIN 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 WISCONSIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and WISCONSIN.
Diversification Opportunities for Microsoft and WISCONSIN
Poor diversification
The 3 months correlation between Microsoft and WISCONSIN is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and WISCONSIN ELEC PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WISCONSIN ELEC PWR 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 WISCONSIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WISCONSIN ELEC PWR has no effect on the direction of Microsoft i.e., Microsoft and WISCONSIN go up and down completely randomly.
Pair Corralation between Microsoft and WISCONSIN
Given the investment horizon of 90 days Microsoft is expected to generate 0.5 times more return on investment than WISCONSIN. However, Microsoft is 2.01 times less risky than WISCONSIN. It trades about -0.07 of its potential returns per unit of risk. WISCONSIN ELEC PWR is currently generating about -0.11 per unit of risk. If you would invest 43,525 in Microsoft on October 22, 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 | Significant |
| Accuracy | 42.11% |
| Values | Daily Returns |
Microsoft vs. WISCONSIN ELEC PWR
Performance |
| Timeline |
| Microsoft |
| WISCONSIN ELEC PWR |
Microsoft and WISCONSIN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and WISCONSIN
The main advantage of trading using opposite Microsoft and WISCONSIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, WISCONSIN 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 WISCONSIN will offset losses from the drop in WISCONSIN's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
| WISCONSIN vs. AEP TEX INC | WISCONSIN vs. US BANK NATIONAL | WISCONSIN vs. 3M Company | WISCONSIN vs. MRC Global |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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