Two Equities Correlation Analysis
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MSFT
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This model provides you with a quick lookup of cross correlation between two equities. Please specify two instruments to run the correlation.
Diversification Opportunities for Microsoft and NYSE Composite
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Microsoft and NYSE is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Microsoft i.e., Microsoft and NYSE Composite go up and down completely randomly.
Pair Corralation between Microsoft and NYSE Composite
Given the investment horizon of 90 days Microsoft is expected to generate 1.76 times more return on investment than NYSE Composite. However, Microsoft is 1.76 times more volatile than NYSE Composite. It trades about 0.15 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.14 per unit of risk. If you would invest 31,093 in Microsoft on January 24, 2024 and sell it today you would earn a total of 9,003 from holding Microsoft or generate 28.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Microsoft vs. NYSE Composite
Performance |
Timeline |
Microsoft and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Microsoft
Pair trading matchups for Microsoft
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Microsoft and NYSE Composite
The main advantage of trading using opposite Microsoft and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Cloudflare |
NYSE Composite vs. Reservoir Media | NYSE Composite vs. National CineMedia | NYSE Composite vs. Ubisoft Entertainment | NYSE Composite vs. Emerson Radio |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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