Correlation Between Microsoft and MIND CTI
Can any of the company-specific risk be diversified away by investing in both Microsoft and MIND CTI 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 MIND CTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and MIND CTI, you can compare the effects of market volatilities on Microsoft and MIND CTI 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 MIND CTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and MIND CTI.
Diversification Opportunities for Microsoft and MIND CTI
Very weak diversification
The 3 months correlation between Microsoft and MIND is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and MIND CTI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIND CTI 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 MIND CTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIND CTI has no effect on the direction of Microsoft i.e., Microsoft and MIND CTI go up and down completely randomly.
Pair Corralation between Microsoft and MIND CTI
Given the investment horizon of 90 days Microsoft is expected to generate 1.14 times more return on investment than MIND CTI. However, Microsoft is 1.14 times more volatile than MIND CTI. It trades about 0.1 of its potential returns per unit of risk. MIND CTI is currently generating about 0.02 per unit of risk. If you would invest 25,243 in Microsoft on January 24, 2024 and sell it today you would earn a total of 14,853 from holding Microsoft or generate 58.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. MIND CTI
Performance |
| Timeline |
| Microsoft |
| MIND CTI |
Microsoft and MIND CTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and MIND CTI
The main advantage of trading using opposite Microsoft and MIND CTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, MIND CTI 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 MIND CTI will offset losses from the drop in MIND CTI's long position.| Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Cloudflare |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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