Correlation Between Microsoft and Wilmington Global
Can any of the company-specific risk be diversified away by investing in both Microsoft and Wilmington Global 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 Wilmington Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Wilmington Global Alpha, you can compare the effects of market volatilities on Microsoft and Wilmington Global 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 Wilmington Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Wilmington Global.
Diversification Opportunities for Microsoft and Wilmington Global
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Wilmington is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Wilmington Global Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Global Alpha 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 Wilmington Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Global Alpha has no effect on the direction of Microsoft i.e., Microsoft and Wilmington Global go up and down completely randomly.
Pair Corralation between Microsoft and Wilmington Global
Given the investment horizon of 90 days Microsoft is expected to generate 6.52 times more return on investment than Wilmington Global. However, Microsoft is 6.52 times more volatile than Wilmington Global Alpha. It trades about 0.51 of its potential returns per unit of risk. Wilmington Global Alpha is currently generating about 0.05 per unit of risk. If you would invest 41,493 in Microsoft on September 18, 2024 and sell it today you would earn a total of 3,953 from holding Microsoft or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Wilmington Global Alpha
Performance |
| Timeline |
| Microsoft |
| Wilmington Global Alpha |
Microsoft and Wilmington Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Wilmington Global
The main advantage of trading using opposite Microsoft and Wilmington Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Wilmington Global 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 Wilmington Global will offset losses from the drop in Wilmington Global's long position.| Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
| Wilmington Global vs. Strategic Allocation Moderate | Wilmington Global vs. Dimensional Retirement Income | Wilmington Global vs. Transamerica Cleartrack Retirement | Wilmington Global vs. Sierra E Retirement |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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