Correlation Between Microsoft and Avivagen
Can any of the company-specific risk be diversified away by investing in both Microsoft and Avivagen 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 Avivagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Avivagen, you can compare the effects of market volatilities on Microsoft and Avivagen 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 Avivagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Avivagen.
Diversification Opportunities for Microsoft and Avivagen
Very good diversification
The 3 months correlation between Microsoft and Avivagen is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Avivagen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avivagen 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 Avivagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avivagen has no effect on the direction of Microsoft i.e., Microsoft and Avivagen go up and down completely randomly.
Pair Corralation between Microsoft and Avivagen
Given the investment horizon of 90 days Microsoft is expected to generate 26.17 times less return on investment than Avivagen. But when comparing it to its historical volatility, Microsoft is 40.59 times less risky than Avivagen. It trades about 0.09 of its potential returns per unit of risk. Avivagen is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6.17 in Avivagen on August 30, 2024 and sell it today you would lose (6.16) from holding Avivagen or give up 99.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Avivagen
Performance |
| Timeline |
| Microsoft |
| Avivagen |
Microsoft and Avivagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Avivagen
The main advantage of trading using opposite Microsoft and Avivagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Avivagen 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 Avivagen will offset losses from the drop in Avivagen's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Avivagen vs. Genomma Lab Internacional | Avivagen vs. City View Green | Avivagen vs. Procyon | Avivagen vs. West Island Brands |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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