Correlation Between Microsoft and Fact

Can any of the company-specific risk be diversified away by investing in both Microsoft and Fact 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 Fact into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and Fact Inc, you can compare the effects of market volatilities on Microsoft and Fact 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 Fact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Fact.

Diversification Opportunities for Microsoft and Fact

0.0

Correlation Coefficient

Microsoft  Fact

Pay attention - limited upside

The 3 months correlation between Microsoft and Fact is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Fact Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fact 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 Fact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fact Inc has no effect on the direction of Microsoft i.e., Microsoft and Fact go up and down completely randomly.

Pair Corralation between Microsoft and Fact

If you would invest  41,879  in Microsoft on September 25, 2024 and sell it today you would earn a total of  2,054  from holding Microsoft or generate 4.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Fact Inc

Microsoft

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Fact Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fact Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Fact is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Microsoft and Fact

The main advantage of trading using opposite Microsoft and Fact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Fact 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 Fact will offset losses from the drop in Fact's long position.

The idea behind Microsoft and Fact Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.