Correlation Between Microsoft and WHA Premium
Can any of the company-specific risk be diversified away by investing in both Microsoft and WHA Premium 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 WHA Premium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and WHA Premium Growth, you can compare the effects of market volatilities on Microsoft and WHA Premium 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 WHA Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and WHA Premium.
Diversification Opportunities for Microsoft and WHA Premium
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and WHA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and WHA Premium Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHA Premium Growth 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 WHA Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHA Premium Growth has no effect on the direction of Microsoft i.e., Microsoft and WHA Premium go up and down completely randomly.
Pair Corralation between Microsoft and WHA Premium
Given the investment horizon of 90 days Microsoft is expected to generate 6.17 times less return on investment than WHA Premium. But when comparing it to its historical volatility, Microsoft is 1.25 times less risky than WHA Premium. It trades about 0.02 of its potential returns per unit of risk. WHA Premium Growth is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 837.00 in WHA Premium Growth on September 2, 2024 and sell it today you would earn a total of 163.00 from holding WHA Premium Growth or generate 19.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Microsoft vs. WHA Premium Growth
Performance |
| Timeline |
| Microsoft |
| WHA Premium Growth |
Microsoft and WHA Premium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and WHA Premium
The main advantage of trading using opposite Microsoft and WHA Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, WHA Premium 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 WHA Premium will offset losses from the drop in WHA Premium's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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