Correlation Between Bridgeline Digital and Microsoft
Can any of the company-specific risk be diversified away by investing in both Bridgeline Digital and Microsoft 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 Bridgeline Digital and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgeline Digital and Microsoft, you can compare the effects of market volatilities on Bridgeline Digital 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 Bridgeline Digital with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgeline Digital and Microsoft.
Diversification Opportunities for Bridgeline Digital and Microsoft
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bridgeline and Microsoft is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bridgeline Digital and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Bridgeline Digital 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 Bridgeline Digital 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 Bridgeline Digital i.e., Bridgeline Digital and Microsoft go up and down completely randomly.
Pair Corralation between Bridgeline Digital and Microsoft
Given the investment horizon of 90 days Bridgeline Digital is expected to generate 3.53 times more return on investment than Microsoft. However, Bridgeline Digital is 3.53 times more volatile than Microsoft. It trades about 0.28 of its potential returns per unit of risk. Microsoft is currently generating about -0.13 per unit of risk. If you would invest 105.00 in Bridgeline Digital on January 25, 2024 and sell it today you would earn a total of 24.00 from holding Bridgeline Digital or generate 22.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bridgeline Digital vs. Microsoft
Performance |
Timeline |
Bridgeline Digital |
Microsoft |
Bridgeline Digital and Microsoft Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bridgeline Digital and Microsoft
The main advantage of trading using opposite Bridgeline Digital and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgeline Digital position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.Bridgeline Digital vs. Taoping | Bridgeline Digital vs. Datasea | Bridgeline Digital vs. Aurora Mobile | Bridgeline Digital vs. Ipsidy Inc |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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