This module allows you to analyze existing cross correlation between Red Hat Inc and Microsoft Corporation. You can compare the effects of market volatilities on Red Hat and Microsoft 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 Red Hat with a short position of Microsoft. See also your portfolio center
. Please also check ongoing floating volatility patterns of Red Hat
Red Hat Inc vs Microsoft Corp.
Considering 30-days investment horizon, Red Hat Inc is expected to generate 0.86 times more return on investment than Microsoft. However, Red Hat Inc is 1.16 times less risky than Microsoft. It trades about 0.3 of its potential returns per unit of risk. Microsoft Corporation is currently generating about 0.01 per unit of risk. If you would invest 12,889 in Red Hat Inc on January 24, 2018 and sell it today you would earn a total of 1,577 from holding Red Hat Inc or generate 12.24% return on investment over 30 days.
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Very weak diversification
Overlapping area represents the amount of risk that can be diversified away by holding Red Hat Inc and Microsoft Corp. in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Red Hat 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 Red Hat Inc are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Red Hat i.e. Red Hat and Microsoft go up and down completely randomly.
Compared to the overall equity markets, risk-adjusted returns on investments in Red Hat Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 30 days.
Over the last 30 days Microsoft Corporation has generated negative risk-adjusted returns adding no value to investors with long positions.