Correlation Between IShares Physical and Microsoft

Can any of the company-specific risk be diversified away by investing in both IShares Physical 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 IShares Physical and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Physical Silver and Microsoft, you can compare the effects of market volatilities on IShares Physical 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 IShares Physical with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Physical and Microsoft.

Diversification Opportunities for IShares Physical and Microsoft

-0.71

Correlation Coefficient

IShares Physical  Microsoft

Pay attention - limited upside

The 3 months correlation between IShares and Microsoft is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding iShares Physical Silver and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and IShares Physical 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 iShares Physical Silver 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 IShares Physical i.e., IShares Physical and Microsoft go up and down completely randomly.

Pair Corralation between IShares Physical and Microsoft

Assuming the 90 days trading horizon iShares Physical Silver is expected to generate 0.63 times more return on investment than Microsoft. However, iShares Physical Silver is 1.59 times less risky than Microsoft. It trades about 0.17 of its potential returns per unit of risk. Microsoft is currently generating about -0.05 per unit of risk. If you would invest  2,815  in iShares Physical Silver on December 25, 2024 and sell it today you would earn a total of  398.00  from holding iShares Physical Silver or generate 14.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

iShares Physical Silver  vs.  Microsoft

iShares Physical Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Physical Silver are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, IShares Physical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with IShares Physical and Microsoft

The main advantage of trading using opposite IShares Physical and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Physical 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.

The idea behind iShares Physical Silver and Microsoft 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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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.