Correlation Between Microsoft and Acr Multi-strategy

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

By analyzing existing cross correlation between Microsoft and Acr Multi Strategy Quality, you can compare the effects of market volatilities on Microsoft and Acr Multi-strategy 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 Acr Multi-strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Acr Multi-strategy.

Diversification Opportunities for Microsoft and Acr Multi-strategy

-0.5

Correlation Coefficient

Microsoft  Acr Multi-strategy

Very good diversification

The 3 months correlation between Microsoft and Acr is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Acr Multi Strategy Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acr Multi Strategy 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 Acr Multi-strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acr Multi Strategy has no effect on the direction of Microsoft i.e., Microsoft and Acr Multi-strategy go up and down completely randomly.

Pair Corralation between Microsoft and Acr Multi-strategy

Given the investment horizon of 90 days Microsoft is expected to generate 1.53 times more return on investment than Acr Multi-strategy. However, Microsoft is 1.53 times more volatile than Acr Multi Strategy Quality. It trades about 0.04 of its potential returns per unit of risk. Acr Multi Strategy Quality is currently generating about -0.13 per unit of risk. If you would invest  41,985  in Microsoft on October 1, 2024 and sell it today you would earn a total of  1,068  from holding Microsoft or generate 2.54% return on investment over 90 days.

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

Microsoft  vs.  Acr Multi Strategy Quality

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Acr Multi Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acr Multi Strategy Quality has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Microsoft and Acr Multi-strategy

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

The idea behind Microsoft and Acr Multi Strategy Quality 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 Positions Ratings module to 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.