Correlation Between Microsoft and 1ws Credit
Can any of the company-specific risk be diversified away by investing in both Microsoft and 1ws Credit 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 1ws Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and 1ws Credit Income, you can compare the effects of market volatilities on Microsoft and 1ws Credit 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 1ws Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and 1ws Credit.
Diversification Opportunities for Microsoft and 1ws Credit
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and 1ws is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and 1ws Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1ws Credit Me 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 1ws Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1ws Credit Me has no effect on the direction of Microsoft i.e., Microsoft and 1ws Credit go up and down completely randomly.
Pair Corralation between Microsoft and 1ws Credit
Given the investment horizon of 90 days Microsoft is expected to generate 14.54 times more return on investment than 1ws Credit. However, Microsoft is 14.54 times more volatile than 1ws Credit Income. It trades about 0.16 of its potential returns per unit of risk. 1ws Credit Income is currently generating about 0.64 per unit of risk. If you would invest 32,662 in Microsoft on January 24, 2024 and sell it today you would earn a total of 8,095 from holding Microsoft or generate 24.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. 1ws Credit Income
Performance |
| Timeline |
| Microsoft |
| 1ws Credit Me |
Microsoft and 1ws Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and 1ws Credit
The main advantage of trading using opposite Microsoft and 1ws Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, 1ws Credit 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 1ws Credit will offset losses from the drop in 1ws Credit'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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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