Correlation Between Microsoft and IShares Short
Can any of the company-specific risk be diversified away by investing in both Microsoft and IShares Short 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 IShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and iShares Short Maturity, you can compare the effects of market volatilities on Microsoft and IShares Short 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 IShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and IShares Short.
Diversification Opportunities for Microsoft and IShares Short
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and IShares is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and iShares Short Maturity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Short Maturity 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 IShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Short Maturity has no effect on the direction of Microsoft i.e., Microsoft and IShares Short go up and down completely randomly.
Pair Corralation between Microsoft and IShares Short
Given the investment horizon of 90 days Microsoft is expected to under-perform the IShares Short. In addition to that, Microsoft is 12.31 times more volatile than iShares Short Maturity. It trades about -0.09 of its total potential returns per unit of risk. iShares Short Maturity is currently generating about 0.15 per unit of volatility. If you would invest 4,997 in iShares Short Maturity on February 9, 2024 and sell it today you would earn a total of 21.00 from holding iShares Short Maturity or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. iShares Short Maturity
Performance |
| Timeline |
| Microsoft |
| iShares Short Maturity |
Microsoft and IShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and IShares Short
The main advantage of trading using opposite Microsoft and IShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, IShares Short 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 IShares Short will offset losses from the drop in IShares Short's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| IShares Short vs. First Trust Low | IShares Short vs. First Trust Senior | IShares Short vs. First Trust TCW | IShares Short vs. First Trust Tactical |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |