Correlation Between Microsoft and AngioDynamics

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Can any of the company-specific risk be diversified away by investing in both Microsoft and AngioDynamics 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 AngioDynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AngioDynamics, you can compare the effects of market volatilities on Microsoft and AngioDynamics 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 AngioDynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AngioDynamics.

Diversification Opportunities for Microsoft and AngioDynamics

  Correlation Coefficient

Excellent diversification

The 3 months correlation between Microsoft and AngioDynamics is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AngioDynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AngioDynamics 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 AngioDynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AngioDynamics has no effect on the direction of Microsoft i.e., Microsoft and AngioDynamics go up and down completely randomly.

Pair Corralation between Microsoft and AngioDynamics

Given the investment horizon of 90 days Microsoft is expected to generate 0.65 times more return on investment than AngioDynamics. However, Microsoft is 1.54 times less risky than AngioDynamics. It trades about 0.35 of its potential returns per unit of risk. AngioDynamics is currently generating about -0.05 per unit of risk. If you would invest  25,016  in Microsoft on December 27, 2022 and sell it today you would earn a total of  3,041  from holding Microsoft or generate 12.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Microsoft  vs.  AngioDynamics

 Performance (%) 

Microsoft Performance

11 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Microsoft unveiled solid returns over the last few months and may actually be approaching a breakup point.

AngioDynamics Performance

0 of 100

Over the last 90 days AngioDynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm insiders.

Microsoft and AngioDynamics Volatility Contrast

   Predicted Return Density   

Pair Trading with Microsoft and AngioDynamics

The main advantage of trading using opposite Microsoft and AngioDynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AngioDynamics 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 AngioDynamics will offset losses from the drop in AngioDynamics' long position.
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The idea behind Microsoft and AngioDynamics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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