Correlation Between Microsoft and Horizon Us
Can any of the company-specific risk be diversified away by investing in both Microsoft and Horizon Us at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microsoft and Horizon Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Horizon Defensive Equity, you can compare the effects of market volatilities on Microsoft and Horizon Us 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 Horizon Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Horizon Us.
Diversification Opportunities for Microsoft and Horizon Us
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Horizon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Horizon Defensive Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Defensive Equity 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 Horizon Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Defensive Equity has no effect on the direction of Microsoft i.e., Microsoft and Horizon Us go up and down completely randomly.
Pair Corralation between Microsoft and Horizon Us
Given the investment horizon of 90 days Microsoft is expected to under-perform the Horizon Us. In addition to that, Microsoft is 2.52 times more volatile than Horizon Defensive Equity. It trades about -0.04 of its total potential returns per unit of risk. Horizon Defensive Equity is currently generating about 0.18 per unit of volatility. If you would invest 3,321 in Horizon Defensive Equity on August 27, 2024 and sell it today you would earn a total of 86.00 from holding Horizon Defensive Equity or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Horizon Defensive Equity
Performance |
| Timeline |
| Microsoft |
| Horizon Defensive Equity |
Microsoft and Horizon Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Horizon Us
The main advantage of trading using opposite Microsoft and Horizon Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Horizon Us 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 Horizon Us will offset losses from the drop in Horizon Us' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Horizon Us vs. Horizon Active Risk | Horizon Us vs. Horizon Active Risk | Horizon Us vs. Horizon Active Asset | Horizon Us vs. Horizon Active Dividend |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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