Correlation Between Microsoft and AURELIUS Equity

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

By analyzing existing cross correlation between Microsoft and AURELIUS Equity Opportunities, you can compare the effects of market volatilities on Microsoft and AURELIUS Equity 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 AURELIUS Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AURELIUS Equity.

Diversification Opportunities for Microsoft and AURELIUS Equity

0.81

Correlation Coefficient

Microsoft  AURELIUS Equity

Very poor diversification

The 3 months correlation between Microsoft and AURELIUS is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AURELIUS Equity Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURELIUS Equity Oppo 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 AURELIUS Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURELIUS Equity Oppo has no effect on the direction of Microsoft i.e., Microsoft and AURELIUS Equity go up and down completely randomly.

Pair Corralation between Microsoft and AURELIUS Equity

If you would invest  40,860  in Microsoft on October 4, 2024 and sell it today you would earn a total of  140.00  from holding Microsoft or generate 0.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  AURELIUS Equity Opportunities

Microsoft

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AURELIUS Equity Oppo

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AURELIUS Equity Opportunities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AURELIUS Equity unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and AURELIUS Equity

The main advantage of trading using opposite Microsoft and AURELIUS Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AURELIUS Equity 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 AURELIUS Equity will offset losses from the drop in AURELIUS Equity's long position.

The idea behind Microsoft and AURELIUS Equity Opportunities 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.