Correlation Between MicroStrategy Incorporated and Xero
Can any of the company-specific risk be diversified away by investing in both MicroStrategy Incorporated and Xero 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 MicroStrategy Incorporated and Xero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroStrategy Incorporated and Xero Limited, you can compare the effects of market volatilities on MicroStrategy Incorporated and Xero 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 MicroStrategy Incorporated with a short position of Xero. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroStrategy Incorporated and Xero.
Diversification Opportunities for MicroStrategy Incorporated and Xero
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MicroStrategy and Xero is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding MicroStrategy Incorporated and Xero Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xero Limited and MicroStrategy Incorporated 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 MicroStrategy Incorporated are associated (or correlated) with Xero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xero Limited has no effect on the direction of MicroStrategy Incorporated i.e., MicroStrategy Incorporated and Xero go up and down completely randomly.
Pair Corralation between MicroStrategy Incorporated and Xero
Given the investment horizon of 90 days MicroStrategy Incorporated is expected to generate 2.89 times more return on investment than Xero. However, MicroStrategy Incorporated is 2.89 times more volatile than Xero Limited. It trades about 0.13 of its potential returns per unit of risk. Xero Limited is currently generating about 0.1 per unit of risk. If you would invest 2,026 in MicroStrategy Incorporated on August 29, 2024 and sell it today you would earn a total of 33,343 from holding MicroStrategy Incorporated or generate 1645.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroStrategy Incorporated vs. Xero Limited
Performance |
| Timeline |
| MicroStrategy Incorporated |
| Xero Limited |
MicroStrategy Incorporated and Xero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroStrategy Incorporated and Xero
The main advantage of trading using opposite MicroStrategy Incorporated and Xero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroStrategy Incorporated position performs unexpectedly, Xero 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 Xero will offset losses from the drop in Xero's long position.| MicroStrategy Incorporated vs. Autodesk | MicroStrategy Incorporated vs. Intuit Inc | MicroStrategy Incorporated vs. Zoom Video Communications | MicroStrategy Incorporated vs. Snowflake |
| Xero vs. Temenos Group AG | Xero vs. RenoWorks Software | Xero vs. Sage Group PLC | Xero vs. 01 Communique Laboratory |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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