Correlation Between Microsoft and A1MT34
Can any of the company-specific risk be diversified away by investing in both Microsoft and A1MT34 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 A1MT34 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and A1MT34, you can compare the effects of market volatilities on Microsoft and A1MT34 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 A1MT34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and A1MT34.
Diversification Opportunities for Microsoft and A1MT34
Very good diversification
The 3 months correlation between Microsoft and A1MT34 is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and A1MT34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1MT34 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 A1MT34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1MT34 has no effect on the direction of Microsoft i.e., Microsoft and A1MT34 go up and down completely randomly.
Pair Corralation between Microsoft and A1MT34
Assuming the 90 days trading horizon Microsoft is expected to generate 0.51 times more return on investment than A1MT34. However, Microsoft is 1.95 times less risky than A1MT34. It trades about 0.12 of its potential returns per unit of risk. A1MT34 is currently generating about -0.02 per unit of risk. If you would invest 9,958 in Microsoft on September 23, 2024 and sell it today you would earn a total of 1,128 from holding Microsoft or generate 11.33% 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. A1MT34
Performance |
Timeline |
Microsoft |
A1MT34 |
Microsoft and A1MT34 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and A1MT34
The main advantage of trading using opposite Microsoft and A1MT34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, A1MT34 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 A1MT34 will offset losses from the drop in A1MT34's long position.Microsoft vs. Oracle | Microsoft vs. Costco Wholesale | Microsoft vs. Porto Seguro SA | Microsoft vs. Fertilizantes Heringer SA |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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