Correlation Between Microsoft and Veritone
Can any of the company-specific risk be diversified away by investing in both Microsoft and Veritone 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 Veritone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Veritone, you can compare the effects of market volatilities on Microsoft and Veritone 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 Veritone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Veritone.
Diversification Opportunities for Microsoft and Veritone
Very good diversification
The 3 months correlation between Microsoft and Veritone is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Veritone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veritone 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 Veritone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veritone has no effect on the direction of Microsoft i.e., Microsoft and Veritone go up and down completely randomly.
Pair Corralation between Microsoft and Veritone
Given the investment horizon of 90 days Microsoft is expected to generate 0.36 times more return on investment than Veritone. However, Microsoft is 2.8 times less risky than Veritone. It trades about -0.03 of its potential returns per unit of risk. Veritone is currently generating about -0.06 per unit of risk. If you would invest 42,150 in Microsoft on November 1, 2024 and sell it today you would lose (659.00) from holding Microsoft or give up 1.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Microsoft vs. Veritone
Performance |
| Timeline |
| Microsoft |
| Veritone |
Microsoft and Veritone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Veritone
The main advantage of trading using opposite Microsoft and Veritone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Veritone 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 Veritone will offset losses from the drop in Veritone's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Veritone vs. Bridgeline Digital | Veritone vs. Aurora Mobile | Veritone vs. Ryvyl Inc | Veritone vs. Global Blue Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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