Correlation Between Microsoft and A10 Network
Can any of the company-specific risk be diversified away by investing in both Microsoft and A10 Network 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 A10 Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and A10 Network, you can compare the effects of market volatilities on Microsoft and A10 Network 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 A10 Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and A10 Network.
Diversification Opportunities for Microsoft and A10 Network
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and A10 is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and A10 Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A10 Network 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 A10 Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A10 Network has no effect on the direction of Microsoft i.e., Microsoft and A10 Network go up and down completely randomly.
Pair Corralation between Microsoft and A10 Network
Given the investment horizon of 90 days Microsoft is expected to under-perform the A10 Network. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.69 times less risky than A10 Network. The stock trades about -0.15 of its potential returns per unit of risk. The A10 Network is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,369 in A10 Network on January 25, 2024 and sell it today you would lose (22.00) from holding A10 Network or give up 1.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. A10 Network
Performance |
| Timeline |
| Microsoft |
| A10 Network |
Microsoft and A10 Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and A10 Network
The main advantage of trading using opposite Microsoft and A10 Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, A10 Network 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 A10 Network will offset losses from the drop in A10 Network's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| A10 Network vs. Sterling Check Corp | A10 Network vs. Repay Holdings Corp | A10 Network vs. SPS Commerce | A10 Network vs. Evertec |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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