Correlation Between Microsoft and Wesmark Government
Can any of the company-specific risk be diversified away by investing in both Microsoft and Wesmark Government 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 Wesmark Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Wesmark Government Bond, you can compare the effects of market volatilities on Microsoft and Wesmark Government 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 Wesmark Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Wesmark Government.
Diversification Opportunities for Microsoft and Wesmark Government
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Wesmark is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Wesmark Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Government Bond 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 Wesmark Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesmark Government Bond has no effect on the direction of Microsoft i.e., Microsoft and Wesmark Government go up and down completely randomly.
Pair Corralation between Microsoft and Wesmark Government
Given the investment horizon of 90 days Microsoft is expected to under-perform the Wesmark Government. In addition to that, Microsoft is 4.69 times more volatile than Wesmark Government Bond. It trades about -0.33 of its total potential returns per unit of risk. Wesmark Government Bond is currently generating about 0.3 per unit of volatility. If you would invest 775.00 in Wesmark Government Bond on November 29, 2024 and sell it today you would earn a total of 16.00 from holding Wesmark Government Bond or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Wesmark Government Bond
Performance |
| Timeline |
| Microsoft |
| Wesmark Government Bond |
Microsoft and Wesmark Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Wesmark Government
The main advantage of trading using opposite Microsoft and Wesmark Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Wesmark Government 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 Wesmark Government will offset losses from the drop in Wesmark Government's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Wesmark Government vs. Wesmark Growth Fund | Wesmark Government vs. Wesmark Small Pany | Wesmark Government vs. Wesmark Balanced Fund | Wesmark Government vs. Wesmark West Virginia |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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