Correlation Between Macys and Microsoft
Can any of the company-specific risk be diversified away by investing in both Macys 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 Macys and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and Microsoft, you can compare the effects of market volatilities on Macys 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 Macys with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and Microsoft.
Diversification Opportunities for Macys and Microsoft
Very weak diversification
The 3 months correlation between Macys and Microsoft is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Macys 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 Macys 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 Macys i.e., Macys and Microsoft go up and down completely randomly.
Pair Corralation between Macys and Microsoft
Taking into account the 90-day investment horizon Macys Inc is expected to generate 2.7 times more return on investment than Microsoft. However, Macys is 2.7 times more volatile than Microsoft. It trades about 0.04 of its potential returns per unit of risk. Microsoft is currently generating about 0.08 per unit of risk. If you would invest 1,577 in Macys Inc on January 24, 2024 and sell it today you would earn a total of 298.00 from holding Macys Inc or generate 18.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Macys Inc vs. Microsoft
Performance |
Timeline |
Macys Inc |
Microsoft |
Macys and Microsoft Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Macys and Microsoft
The main advantage of trading using opposite Macys and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys 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.Macys vs. Marks Spencer Group | Macys vs. Marks and Spencer | Macys vs. Dillards Capital Trust | Macys vs. Companhia Brasileira de |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |