Correlation Between Microsoft and Aberdeen Global
Can any of the company-specific risk be diversified away by investing in both Microsoft and Aberdeen 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 Aberdeen Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Aberdeen Global Premier, you can compare the effects of market volatilities on Microsoft and Aberdeen 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 Aberdeen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Aberdeen Global.
Diversification Opportunities for Microsoft and Aberdeen Global
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Aberdeen is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Aberdeen Global Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global Premier 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 Aberdeen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Global Premier has no effect on the direction of Microsoft i.e., Microsoft and Aberdeen Global go up and down completely randomly.
Pair Corralation between Microsoft and Aberdeen Global
Given the investment horizon of 90 days Microsoft is expected to generate 1.14 times less return on investment than Aberdeen Global. In addition to that, Microsoft is 1.01 times more volatile than Aberdeen Global Premier. It trades about 0.05 of its total potential returns per unit of risk. Aberdeen Global Premier is currently generating about 0.06 per unit of volatility. If you would invest 423.00 in Aberdeen Global Premier on September 3, 2024 and sell it today you would earn a total of 18.00 from holding Aberdeen Global Premier or generate 4.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Microsoft vs. Aberdeen Global Premier
Performance |
Timeline |
Microsoft |
Aberdeen Global Premier |
Microsoft and Aberdeen Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Aberdeen Global
The main advantage of trading using opposite Microsoft and Aberdeen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Aberdeen 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 Aberdeen Global will offset losses from the drop in Aberdeen Global's long position.Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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