Correlation Between Microsoft and New Opportunities
Can any of the company-specific risk be diversified away by investing in both Microsoft and New Opportunities 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 New Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and New Opportunities Fund, you can compare the effects of market volatilities on Microsoft and New Opportunities 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 New Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and New Opportunities.
Diversification Opportunities for Microsoft and New Opportunities
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and New Opportunities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Opportunities 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 New Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Opportunities has no effect on the direction of Microsoft i.e., Microsoft and New Opportunities go up and down completely randomly.
Pair Corralation between Microsoft and New Opportunities
If you would invest (100.00) in New Opportunities Fund on January 21, 2024 and sell it today you would earn a total of 100.00 from holding New Opportunities Fund or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Microsoft vs. New Opportunities Fund
Performance |
| Timeline |
| Microsoft |
| New Opportunities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and New Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and New Opportunities
The main advantage of trading using opposite Microsoft and New Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, New Opportunities 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 New Opportunities will offset losses from the drop in New Opportunities' long position.| Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Cloudflare |
| New Opportunities vs. Ab Centrated Growth | New Opportunities vs. L Abbett Growth | New Opportunities vs. Qs Defensive Growth | New Opportunities vs. Auer Growth Fund |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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