Correlation Between Microsoft and PREMIER FOODS
Can any of the company-specific risk be diversified away by investing in both Microsoft and PREMIER FOODS 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 PREMIER FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and PREMIER FOODS, you can compare the effects of market volatilities on Microsoft and PREMIER FOODS 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 PREMIER FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and PREMIER FOODS.
Diversification Opportunities for Microsoft and PREMIER FOODS
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and PREMIER is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS 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 PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of Microsoft i.e., Microsoft and PREMIER FOODS go up and down completely randomly.
Pair Corralation between Microsoft and PREMIER FOODS
Assuming the 90 days trading horizon Microsoft is expected to generate 1.3 times more return on investment than PREMIER FOODS. However, Microsoft is 1.3 times more volatile than PREMIER FOODS. It trades about 0.19 of its potential returns per unit of risk. PREMIER FOODS is currently generating about 0.05 per unit of risk. If you would invest 39,845 in Microsoft on September 25, 2024 and sell it today you would earn a total of 2,120 from holding Microsoft or generate 5.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Microsoft vs. PREMIER FOODS
Performance |
Timeline |
Microsoft |
PREMIER FOODS |
Microsoft and PREMIER FOODS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and PREMIER FOODS
The main advantage of trading using opposite Microsoft and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, PREMIER FOODS 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 PREMIER FOODS will offset losses from the drop in PREMIER FOODS's long position.Microsoft vs. American Public Education | Microsoft vs. G8 EDUCATION | Microsoft vs. TAL Education Group | Microsoft vs. ETFS Coffee ETC |
PREMIER FOODS vs. Apple Inc | PREMIER FOODS vs. Apple Inc | PREMIER FOODS vs. Microsoft | PREMIER FOODS vs. Microsoft |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |