Correlation Between Microsoft and Glimpse
Can any of the company-specific risk be diversified away by investing in both Microsoft and Glimpse 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 Glimpse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Glimpse Group, you can compare the effects of market volatilities on Microsoft and Glimpse 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 Glimpse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Glimpse.
Diversification Opportunities for Microsoft and Glimpse
Good diversification
The 3 months correlation between Microsoft and Glimpse is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Glimpse Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glimpse Group 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 Glimpse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glimpse Group has no effect on the direction of Microsoft i.e., Microsoft and Glimpse go up and down completely randomly.
Pair Corralation between Microsoft and Glimpse
Given the investment horizon of 90 days Microsoft is expected to under-perform the Glimpse. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 3.89 times less risky than Glimpse. The stock trades about -0.04 of its potential returns per unit of risk. The Glimpse Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 70.00 in Glimpse Group on August 28, 2024 and sell it today you would earn a total of 8.00 from holding Glimpse Group or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Glimpse Group
Performance |
| Timeline |
| Microsoft |
| Glimpse Group |
Microsoft and Glimpse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Glimpse
The main advantage of trading using opposite Microsoft and Glimpse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Glimpse 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 Glimpse will offset losses from the drop in Glimpse's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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