Correlation Between Microsoft and Safety Shot
Can any of the company-specific risk be diversified away by investing in both Microsoft and Safety Shot 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 Safety Shot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Safety Shot, you can compare the effects of market volatilities on Microsoft and Safety Shot 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 Safety Shot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Safety Shot.
Diversification Opportunities for Microsoft and Safety Shot
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Safety is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Microsoft i.e., Microsoft and Safety Shot go up and down completely randomly.
Pair Corralation between Microsoft and Safety Shot
Given the investment horizon of 90 days Microsoft is expected to generate 0.29 times more return on investment than Safety Shot. However, Microsoft is 3.45 times less risky than Safety Shot. It trades about 0.02 of its potential returns per unit of risk. Safety Shot is currently generating about -0.12 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 Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Microsoft vs. Safety Shot
Performance |
Timeline |
Microsoft |
Safety Shot |
Microsoft and Safety Shot Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Safety Shot
The main advantage of trading using opposite Microsoft and Safety Shot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Safety Shot 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 Safety Shot will offset losses from the drop in Safety Shot's long position.Microsoft vs. BlackBerry | Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta |
Safety Shot vs. NuRAN Wireless | Safety Shot vs. Weibo Corp | Safety Shot vs. Sea | Safety Shot vs. Tradeweb Markets |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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