Correlation Between Microsoft and Core Bond
Can any of the company-specific risk be diversified away by investing in both Microsoft and Core Bond 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 Core Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Core Bond Fund, you can compare the effects of market volatilities on Microsoft and Core Bond 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 Core Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Core Bond.
Diversification Opportunities for Microsoft and Core Bond
Significant diversification
The 3 months correlation between Microsoft and Core is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Core Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Bond Fund 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 Core Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Bond Fund has no effect on the direction of Microsoft i.e., Microsoft and Core Bond go up and down completely randomly.
Pair Corralation between Microsoft and Core Bond
Given the investment horizon of 90 days Microsoft is expected to generate 3.85 times more return on investment than Core Bond. However, Microsoft is 3.85 times more volatile than Core Bond Fund. It trades about 0.02 of its potential returns per unit of risk. Core Bond Fund is currently generating about -0.21 per unit of risk. If you would invest 43,125 in Microsoft on September 25, 2024 and sell it today you would earn a total of 400.00 from holding Microsoft or generate 0.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Microsoft vs. Core Bond Fund
Performance |
Timeline |
Microsoft |
Core Bond Fund |
Microsoft and Core Bond Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Core Bond
The main advantage of trading using opposite Microsoft and Core Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Core Bond 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 Core Bond will offset losses from the drop in Core Bond's long position.Microsoft vs. BlackBerry | Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta |
Core Bond vs. Regional Bank Fund | Core Bond vs. Regional Bank Fund | Core Bond vs. Multimanager Lifestyle Moderate | Core Bond vs. Multimanager Lifestyle Balanced |
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.
Other Complementary Tools
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |