Correlation Between Microsoft and XWELL
Can any of the company-specific risk be diversified away by investing in both Microsoft and XWELL 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 XWELL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and XWELL Inc, you can compare the effects of market volatilities on Microsoft and XWELL 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 XWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and XWELL.
Diversification Opportunities for Microsoft and XWELL
Significant diversification
The 3 months correlation between Microsoft and XWELL is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and XWELL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XWELL Inc 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 XWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XWELL Inc has no effect on the direction of Microsoft i.e., Microsoft and XWELL go up and down completely randomly.
Pair Corralation between Microsoft and XWELL
Given the investment horizon of 90 days Microsoft is expected to generate 0.27 times more return on investment than XWELL. However, Microsoft is 3.68 times less risky than XWELL. It trades about 0.08 of its potential returns per unit of risk. XWELL Inc is currently generating about -0.05 per unit of risk. If you would invest 24,616 in Microsoft on August 25, 2024 and sell it today you would earn a total of 17,084 from holding Microsoft or generate 69.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Microsoft vs. XWELL Inc
Performance |
| Timeline |
| Microsoft |
| XWELL Inc |
Microsoft and XWELL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and XWELL
The main advantage of trading using opposite Microsoft and XWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, XWELL 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 XWELL will offset losses from the drop in XWELL's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| XWELL vs. Mister Car Wash | XWELL vs. Interactive Strength Common | XWELL vs. Goodfood Market Corp | XWELL vs. Frontdoor |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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