Correlation Analysis Between Microsoft and DOW

This module allows you to analyze existing cross correlation between Microsoft Corporation and DOW. You can compare the effects of market volatilities on Microsoft and DOW 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 DOW. See also your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and DOW.
Horizon     30 Days    Login   to change
Symbolsvs
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Comparative Performance

 Predicted Return Density 
      Returns 

Microsoft Corp.  vs.  DOW

 Performance (%) 
      Timeline 

Pair Volatility

Given the investment horizon of 30 days, Microsoft Corporation is expected to generate 1.59 times more return on investment than DOW. However, Microsoft is 1.59 times more volatile than DOW. It trades about 0.12 of its potential returns per unit of risk. DOW is currently generating about 0.15 per unit of risk. If you would invest  13,879  in Microsoft Corporation on October 20, 2019 and sell it today you would earn a total of  1,166  from holding Microsoft Corporation or generate 8.4% return on investment over 30 days.

Pair Corralation between Microsoft and DOW

0.83
Time Period3 Months [change]
DirectionPositive 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Diversification Opportunities for Microsoft and DOW

Microsoft Corp. diversification synergy

Very poor diversification

Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp. and DOW in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on DOW 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 Corporation are associated (or correlated) with DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of Microsoft i.e. Microsoft and DOW go up and down completely randomly.
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