Correlation Between Microsoft and Aviation Links
Can any of the company-specific risk be diversified away by investing in both Microsoft and Aviation Links 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 Aviation Links into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Aviation Links, you can compare the effects of market volatilities on Microsoft and Aviation Links 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 Aviation Links. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Aviation Links.
Diversification Opportunities for Microsoft and Aviation Links
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Aviation is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Aviation Links in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aviation Links 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 Aviation Links. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aviation Links has no effect on the direction of Microsoft i.e., Microsoft and Aviation Links go up and down completely randomly.
Pair Corralation between Microsoft and Aviation Links
Given the investment horizon of 90 days Microsoft is expected to generate 2.47 times less return on investment than Aviation Links. But when comparing it to its historical volatility, Microsoft is 1.65 times less risky than Aviation Links. It trades about 0.05 of its potential returns per unit of risk. Aviation Links is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 80,190 in Aviation Links on January 24, 2024 and sell it today you would earn a total of 73,510 from holding Aviation Links or generate 91.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 78.95% |
| Values | Daily Returns |
Microsoft vs. Aviation Links
Performance |
| Timeline |
| Microsoft |
| Aviation Links |
Microsoft and Aviation Links Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Aviation Links
The main advantage of trading using opposite Microsoft and Aviation Links positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Aviation Links 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 Aviation Links will offset losses from the drop in Aviation Links' long position.| Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Cloudflare |
| Aviation Links vs. Clal Insurance Enterprises | Aviation Links vs. Israel Discount Bank | Aviation Links vs. Bezeq Israeli Telecommunication | Aviation Links vs. Alony Hetz Properties |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |