Correlation Between Microsoft and Gmo Global
Can any of the company-specific risk be diversified away by investing in both Microsoft and Gmo 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 Gmo Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Gmo Global Asset, you can compare the effects of market volatilities on Microsoft and Gmo 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 Gmo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Gmo Global.
Diversification Opportunities for Microsoft and Gmo Global
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Gmo is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Gmo Global Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Asset 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 Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Asset has no effect on the direction of Microsoft i.e., Microsoft and Gmo Global go up and down completely randomly.
Pair Corralation between Microsoft and Gmo Global
Given the investment horizon of 90 days Microsoft is expected to generate 2.74 times more return on investment than Gmo Global. However, Microsoft is 2.74 times more volatile than Gmo Global Asset. It trades about 0.05 of its potential returns per unit of risk. Gmo Global Asset is currently generating about -0.04 per unit of risk. If you would invest 43,048 in Microsoft on September 14, 2024 and sell it today you would earn a total of 1,679 from holding Microsoft or generate 3.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
Microsoft vs. Gmo Global Asset
Performance |
Timeline |
Microsoft |
Gmo Global Asset |
Microsoft and Gmo Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Gmo Global
The main advantage of trading using opposite Microsoft and Gmo Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Gmo 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 Gmo Global will offset losses from the drop in Gmo 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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