diversifiable risk of combining Microsoft and Eubel Brady into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Eubel Brady Suttman, you can compare the effects of market volatilities on Microsoft and Eubel Brady 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 Eubel Brady. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Eubel Brady.
Diversification Opportunities for Microsoft and Eubel Brady
Pair Corralation between Microsoft and Eubel Brady
Given the investment horizon of 90 days Microsoft is expected to generate 7.13 times more return on investment than Eubel Brady. However, Microsoft is 7.13 times more volatile than Eubel Brady Suttman. It trades about 0.13 of its potential returns per unit of risk. Eubel Brady Suttman is currently generating about -0.11 per unit of risk. If you would invest 40,303 in Microsoft on December 3, 2023 and sell it today you would earn a total of 1,247 from holding Microsoft or generate 3.09% return on investment over 90 days.
Microsoft vs. EUBEL BRADY SUTTMAN
Microsoft and Eubel Brady Volatility Contrast
Pair Trading with Microsoft and Eubel BradyThe main advantage of trading using opposite Microsoft and Eubel Brady positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Eubel Brady 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 Eubel Brady will offset losses from the drop in Eubel Brady's long position. The idea behind Microsoft and Eubel Brady Suttman 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.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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