Correlation Between Microsoft and HAN GINS
Can any of the company-specific risk be diversified away by investing in both Microsoft and HAN GINS 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 HAN GINS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HAN GINS Indxx Healthcare, you can compare the effects of market volatilities on Microsoft and HAN GINS 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 HAN GINS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HAN GINS.
Diversification Opportunities for Microsoft and HAN GINS
Average diversification
The 3 months correlation between Microsoft and HAN is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HAN GINS Indxx Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAN GINS Indxx 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 HAN GINS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAN GINS Indxx has no effect on the direction of Microsoft i.e., Microsoft and HAN GINS go up and down completely randomly.
Pair Corralation between Microsoft and HAN GINS
Given the investment horizon of 90 days Microsoft is expected to generate 0.8 times more return on investment than HAN GINS. However, Microsoft is 1.25 times less risky than HAN GINS. It trades about 0.2 of its potential returns per unit of risk. HAN GINS Indxx Healthcare is currently generating about -0.06 per unit of risk. If you would invest 41,493 in Microsoft on September 19, 2024 and sell it today you would earn a total of 2,246 from holding Microsoft or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. HAN GINS Indxx Healthcare
Performance |
| Timeline |
| Microsoft |
| HAN GINS Indxx |
Microsoft and HAN GINS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and HAN GINS
The main advantage of trading using opposite Microsoft and HAN GINS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, HAN GINS 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 HAN GINS will offset losses from the drop in HAN GINS's long position.| Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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