Correlation Between Microsoft and Workpoint Entertainment
Can any of the company-specific risk be diversified away by investing in both Microsoft and Workpoint Entertainment 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 Workpoint Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Workpoint Entertainment Public, you can compare the effects of market volatilities on Microsoft and Workpoint Entertainment 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 Workpoint Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Workpoint Entertainment.
Diversification Opportunities for Microsoft and Workpoint Entertainment
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Workpoint is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Workpoint Entertainment Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workpoint Entertainment 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 Workpoint Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workpoint Entertainment has no effect on the direction of Microsoft i.e., Microsoft and Workpoint Entertainment go up and down completely randomly.
Pair Corralation between Microsoft and Workpoint Entertainment
Given the investment horizon of 90 days Microsoft is expected to generate 15.63 times less return on investment than Workpoint Entertainment. But when comparing it to its historical volatility, Microsoft is 34.61 times less risky than Workpoint Entertainment. It trades about 0.09 of its potential returns per unit of risk. Workpoint Entertainment Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,811 in Workpoint Entertainment Public on August 27, 2024 and sell it today you would lose (1,006) from holding Workpoint Entertainment Public or give up 55.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.7% |
| Values | Daily Returns |
Microsoft vs. Workpoint Entertainment Public
Performance |
| Timeline |
| Microsoft |
| Workpoint Entertainment |
Microsoft and Workpoint Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Workpoint Entertainment
The main advantage of trading using opposite Microsoft and Workpoint Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Workpoint Entertainment 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 Workpoint Entertainment will offset losses from the drop in Workpoint Entertainment'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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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