Correlation Between Investor and Microsoft
Can any of the company-specific risk be diversified away by investing in both Investor and Microsoft 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 Investor and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB and Microsoft, you can compare the effects of market volatilities on Investor and Microsoft 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 Investor with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Microsoft.
Diversification Opportunities for Investor and Microsoft
Pay attention - limited upside
The 3 months correlation between Investor and Microsoft is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Investor 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 Investor AB are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Investor i.e., Investor and Microsoft go up and down completely randomly.
Pair Corralation between Investor and Microsoft
If you would invest (100.00) in Investor AB on January 25, 2024 and sell it today you would earn a total of 100.00 from holding Investor AB or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Investor AB vs. Microsoft
Performance |
| Timeline |
| Investor AB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Microsoft |
Investor and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and Microsoft
The main advantage of trading using opposite Investor and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| Investor vs. Boston Properties | Investor vs. MI Homes | Investor vs. SL Green Realty | Investor vs. Live Ventures |
| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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