Correlation Between Microsoft and STAG Industrial,
Can any of the company-specific risk be diversified away by investing in both Microsoft and STAG Industrial, 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 STAG Industrial, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and STAG Industrial,, you can compare the effects of market volatilities on Microsoft and STAG Industrial, 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 STAG Industrial,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and STAG Industrial,.
Diversification Opportunities for Microsoft and STAG Industrial,
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and STAG is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and STAG Industrial, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STAG Industrial, 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 STAG Industrial,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STAG Industrial, has no effect on the direction of Microsoft i.e., Microsoft and STAG Industrial, go up and down completely randomly.
Pair Corralation between Microsoft and STAG Industrial,
Assuming the 90 days trading horizon Microsoft is expected to under-perform the STAG Industrial,. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.75 times less risky than STAG Industrial,. The stock trades about -0.32 of its potential returns per unit of risk. The STAG Industrial, is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 4,342 in STAG Industrial, on October 17, 2024 and sell it today you would lose (274.00) from holding STAG Industrial, or give up 6.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. STAG Industrial,
Performance |
| Timeline |
| Microsoft |
| STAG Industrial, |
Microsoft and STAG Industrial, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and STAG Industrial,
The main advantage of trading using opposite Microsoft and STAG Industrial, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, STAG Industrial, 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 STAG Industrial, will offset losses from the drop in STAG Industrial,'s long position.| Microsoft vs. Prudential Financial | Microsoft vs. United Natural Foods, | Microsoft vs. Mitsubishi UFJ Financial | Microsoft vs. Charter Communications |
| STAG Industrial, vs. Taiwan Semiconductor Manufacturing | STAG Industrial, vs. Apple Inc | STAG Industrial, vs. Alibaba Group Holding | STAG Industrial, vs. Microsoft |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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