Correlation Between Microsoft and Ivy Advantus

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

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

Diversification Opportunities for Microsoft and Ivy Advantus

-0.37

Correlation Coefficient

Microsoft  Ivy Advantus

Very good diversification

The 3 months correlation between Microsoft and Ivy is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Ivy Advantus Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Advantus Real 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 Ivy Advantus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Advantus Real has no effect on the direction of Microsoft i.e., Microsoft and Ivy Advantus go up and down completely randomly.

Pair Corralation between Microsoft and Ivy Advantus

Given the investment horizon of 90 days Microsoft is expected to generate 1.02 times more return on investment than Ivy Advantus. However, Microsoft is 1.02 times more volatile than Ivy Advantus Real. It trades about 0.05 of its potential returns per unit of risk. Ivy Advantus Real is currently generating about 0.01 per unit of risk. If you would invest  37,986  in Microsoft on September 23, 2024 and sell it today you would earn a total of  5,674  from holding Microsoft or generate 14.94% return on investment over 90 days.

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

Microsoft  vs.  Ivy Advantus Real

Microsoft

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 1 (%) 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.

Ivy Advantus Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivy Advantus Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Microsoft and Ivy Advantus

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

The idea behind Microsoft and Ivy Advantus Real 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.